Correlation Between Exchange Traded and AdvisorShares
Can any of the company-specific risk be diversified away by investing in both Exchange Traded and AdvisorShares 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 Exchange Traded and AdvisorShares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Exchange Traded Concepts and AdvisorShares, you can compare the effects of market volatilities on Exchange Traded and AdvisorShares 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 Exchange Traded with a short position of AdvisorShares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exchange Traded and AdvisorShares.
Diversification Opportunities for Exchange Traded and AdvisorShares
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Exchange and AdvisorShares is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Exchange Traded Concepts and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares and Exchange Traded 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 Exchange Traded Concepts are associated (or correlated) with AdvisorShares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares has no effect on the direction of Exchange Traded i.e., Exchange Traded and AdvisorShares go up and down completely randomly.
Pair Corralation between Exchange Traded and AdvisorShares
Considering the 90-day investment horizon Exchange Traded Concepts is expected to generate 5.5 times more return on investment than AdvisorShares. However, Exchange Traded is 5.5 times more volatile than AdvisorShares. It trades about 0.02 of its potential returns per unit of risk. AdvisorShares is currently generating about 0.03 per unit of risk. If you would invest 2,569 in Exchange Traded Concepts on September 3, 2024 and sell it today you would earn a total of 54.00 from holding Exchange Traded Concepts or generate 2.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.25% |
| Values | Daily Returns |
Exchange Traded Concepts vs. AdvisorShares
Performance |
| Timeline |
| Exchange Traded Concepts |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| AdvisorShares |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Exchange Traded and AdvisorShares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Exchange Traded and AdvisorShares
The main advantage of trading using opposite Exchange Traded and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Exchange Traded position performs unexpectedly, AdvisorShares 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 will offset losses from the drop in AdvisorShares' long position.| Exchange Traded vs. QRAFT AI Enhanced Large | Exchange Traded vs. QRAFT AI Enhanced Large | Exchange Traded vs. WisdomTree Trust |
| AdvisorShares vs. WisdomTree Trust | AdvisorShares vs. QRAFT AI Enhanced Large | AdvisorShares vs. Northern Lights | AdvisorShares vs. First Trust Exchange Traded |
Check out your portfolio center.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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios |