Correlation Between IShares Dividend and AdvisorShares Vice

Can any of the company-specific risk be diversified away by investing in both IShares Dividend and AdvisorShares Vice 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 IShares Dividend and AdvisorShares Vice into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Dividend and and AdvisorShares Vice ETF, you can compare the effects of market volatilities on IShares Dividend and AdvisorShares Vice 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 IShares Dividend with a short position of AdvisorShares Vice. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Dividend and AdvisorShares Vice.

Diversification Opportunities for IShares Dividend and AdvisorShares Vice

0.9

Correlation Coefficient

IShares Dividend  AdvisorShares Vice

Almost no diversification

The 3 months correlation between IShares and AdvisorShares is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding iShares Dividend and and AdvisorShares Vice ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Vice ETF and IShares Dividend 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 iShares Dividend and are associated (or correlated) with AdvisorShares Vice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Vice ETF has no effect on the direction of IShares Dividend i.e., IShares Dividend and AdvisorShares Vice go up and down completely randomly.

Pair Corralation between IShares Dividend and AdvisorShares Vice

Given the investment horizon of 90 days IShares Dividend is expected to generate 1.8 times less return on investment than AdvisorShares Vice. But when comparing it to its historical volatility, iShares Dividend and is 1.02 times less risky than AdvisorShares Vice. It trades about 0.14 of its potential returns per unit of risk. AdvisorShares Vice ETF is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3,050  in AdvisorShares Vice ETF on September 12, 2024 and sell it today you would earn a total of  341.00  from holding AdvisorShares Vice ETF or generate 11.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

iShares Dividend and  vs.  AdvisorShares Vice ETF

iShares Dividend

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Dividend and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Dividend is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

AdvisorShares Vice ETF

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in AdvisorShares Vice ETF are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, AdvisorShares Vice may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with IShares Dividend and AdvisorShares Vice

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

The idea behind iShares Dividend and and AdvisorShares Vice 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.