Correlation Between AdvisorShares Pure and Cambria Cannabis

Can any of the company-specific risk be diversified away by investing in both AdvisorShares Pure and Cambria Cannabis 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 Cambria Cannabis 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 Cambria Cannabis ETF, you can compare the effects of market volatilities on AdvisorShares Pure and Cambria Cannabis 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 Cambria Cannabis. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Pure and Cambria Cannabis.

Diversification Opportunities for AdvisorShares Pure and Cambria Cannabis

0.88

Correlation Coefficient

AdvisorShares Pure  Cambria Cannabis

Very poor diversification

The 3 months correlation between AdvisorShares and Cambria is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Pure Cannabis and Cambria Cannabis ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Cannabis ETF 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 Cambria Cannabis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Cannabis ETF has no effect on the direction of AdvisorShares Pure i.e., AdvisorShares Pure and Cambria Cannabis go up and down completely randomly.

Pair Corralation between AdvisorShares Pure and Cambria Cannabis

Given the investment horizon of 90 days AdvisorShares Pure Cannabis is expected to under-perform the Cambria Cannabis. In addition to that, AdvisorShares Pure is 1.54 times more volatile than Cambria Cannabis ETF. It trades about -0.22 of its total potential returns per unit of risk. Cambria Cannabis ETF is currently generating about -0.14 per unit of volatility. If you would invest  513.00  in Cambria Cannabis ETF on December 31, 2024 and sell it today you would lose (60.00) from holding Cambria Cannabis ETF or give up 11.7% of portfolio value over 90 days.

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

AdvisorShares Pure Cannabis  vs.  Cambria Cannabis ETF

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 May 2025. The recent disarray may also be a sign of long period up-swing for the ETF investors.

Cambria Cannabis ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cambria Cannabis ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's forward-looking signals remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with AdvisorShares Pure and Cambria Cannabis

The main advantage of trading using opposite AdvisorShares Pure and Cambria Cannabis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Pure position performs unexpectedly, Cambria Cannabis 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 Cambria Cannabis will offset losses from the drop in Cambria Cannabis' long position.

The idea behind AdvisorShares Pure Cannabis and Cambria Cannabis ETF 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.