Correlation Between AdvisorShares Focused and Vanguard Total
Can any of the company-specific risk be diversified away by investing in both AdvisorShares Focused and Vanguard Total 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 Focused and Vanguard Total into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AdvisorShares Focused Equity and Vanguard Total Stock, you can compare the effects of market volatilities on AdvisorShares Focused and Vanguard Total 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 Focused with a short position of Vanguard Total. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares Focused and Vanguard Total.
Diversification Opportunities for AdvisorShares Focused and Vanguard Total
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between AdvisorShares and Vanguard is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Focused Equity and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and AdvisorShares Focused 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 Focused Equity are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of AdvisorShares Focused i.e., AdvisorShares Focused and Vanguard Total go up and down completely randomly.
Pair Corralation between AdvisorShares Focused and Vanguard Total
Considering the 90-day investment horizon AdvisorShares Focused Equity is expected to generate 1.0 times more return on investment than Vanguard Total. However, AdvisorShares Focused is 1.0 times more volatile than Vanguard Total Stock. It trades about -0.14 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about -0.16 per unit of risk. If you would invest 6,250 in AdvisorShares Focused Equity on January 26, 2024 and sell it today you would lose (150.00) from holding AdvisorShares Focused Equity or give up 2.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
AdvisorShares Focused Equity vs. Vanguard Total Stock
Performance |
| Timeline |
| AdvisorShares Focused |
| Vanguard Total Stock |
AdvisorShares Focused and Vanguard Total Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AdvisorShares Focused and Vanguard Total
The main advantage of trading using opposite AdvisorShares Focused and Vanguard Total positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AdvisorShares Focused position performs unexpectedly, Vanguard Total 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 Vanguard Total will offset losses from the drop in Vanguard Total's long position.| AdvisorShares Focused vs. SPDR Russell 1000 | AdvisorShares Focused vs. SPDR MSCI USA | AdvisorShares Focused vs. SPDR MSCI EAFE | AdvisorShares Focused vs. SPDR SSGA Large |
| Vanguard Total vs. SPDR MSCI EAFE | Vanguard Total vs. SPDR MSCI Emerging | Vanguard Total vs. SPDR Russell 1000 | Vanguard Total vs. SPDR Russell 1000 |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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