Correlation Between AdvisorShares Pure and Dow Jones
Can any of the company-specific risk be diversified away by investing in both AdvisorShares Pure and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on AdvisorShares Pure and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Pure and Dow Jones.
Diversification Opportunities for AdvisorShares Pure and Dow Jones
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between AdvisorShares and Dow is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Pure Cannabis and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of AdvisorShares Pure i.e., AdvisorShares Pure and Dow Jones go up and down completely randomly.
Pair Corralation between AdvisorShares Pure and Dow Jones
Given the investment horizon of 90 days AdvisorShares Pure Cannabis is expected to under-perform the Dow Jones. In addition to that, AdvisorShares Pure is 9.14 times more volatile than Dow Jones Industrial. It trades about -0.23 of its total potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.15 per unit of volatility. If you would invest 4,251,495 in Dow Jones Industrial on August 24, 2024 and sell it today you would earn a total of 135,540 from holding Dow Jones Industrial or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AdvisorShares Pure Cannabis vs. Dow Jones Industrial
Performance |
| Timeline |
AdvisorShares Pure and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
AdvisorShares Pure Cannabis
Pair trading matchups for AdvisorShares Pure
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with AdvisorShares Pure and Dow Jones
The main advantage of trading using opposite AdvisorShares Pure and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Pure position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| AdvisorShares Pure vs. AdvisorShares Pure Cannabis | AdvisorShares Pure vs. Trulieve Cannabis Corp | AdvisorShares Pure vs. Green Thumb Industries | AdvisorShares Pure vs. Amplify Seymour Cannabis |
| Dow Jones vs. Barrick Gold Corp | Dow Jones vs. Jutal Offshore Oil | Dow Jones vs. Eastern Co | Dow Jones vs. Weyco Group |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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