Correlation Between AdvisorShares Pure and AdvisorShares Pure

Can any of the company-specific risk be diversified away by investing in both AdvisorShares Pure and AdvisorShares Pure at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AdvisorShares Pure and AdvisorShares Pure into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AdvisorShares Pure Cannabis and AdvisorShares Pure Cannabis, you can compare the effects of market volatilities on AdvisorShares Pure and AdvisorShares Pure and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AdvisorShares Pure with a short position of AdvisorShares Pure. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Pure and AdvisorShares Pure.

Diversification Opportunities for AdvisorShares Pure and AdvisorShares Pure

0.99

Correlation Coefficient

AdvisorShares Pure  AdvisorShares Pure

No risk reduction

The 3 months correlation between AdvisorShares and AdvisorShares is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Pure Cannabis and AdvisorShares Pure Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Pure and AdvisorShares Pure is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AdvisorShares Pure Cannabis are associated (or correlated) with AdvisorShares Pure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Pure has no effect on the direction of AdvisorShares Pure i.e., AdvisorShares Pure and AdvisorShares Pure go up and down completely randomly.

Pair Corralation between AdvisorShares Pure and AdvisorShares Pure

Given the investment horizon of 90 days AdvisorShares Pure Cannabis is expected to generate 0.56 times more return on investment than AdvisorShares Pure. However, AdvisorShares Pure Cannabis is 1.8 times less risky than AdvisorShares Pure. It trades about -0.19 of its potential returns per unit of risk. AdvisorShares Pure Cannabis is currently generating about -0.11 per unit of risk. If you would invest  235.00  in AdvisorShares Pure Cannabis on December 30, 2024 and sell it today you would lose (55.00) from holding AdvisorShares Pure Cannabis or give up 23.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

AdvisorShares Pure Cannabis  vs.  AdvisorShares Pure Cannabis

AdvisorShares Pure

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvisorShares Pure Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's essential indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

AdvisorShares Pure

Risk-Adjusted Performance

Very Weak

Over the last 90 days AdvisorShares Pure Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with AdvisorShares Pure and AdvisorShares Pure

The main advantage of trading using opposite AdvisorShares Pure and AdvisorShares Pure positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Pure position performs unexpectedly, AdvisorShares Pure can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in AdvisorShares Pure will offset losses from the drop in AdvisorShares Pure's long position.

The idea behind AdvisorShares Pure Cannabis and AdvisorShares Pure Cannabis pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.