Correlation Between IShares Intermediate and AdvisorShares

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

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

Diversification Opportunities for IShares Intermediate and AdvisorShares

0.18

Correlation Coefficient

IShares Intermediate  AdvisorShares

Average diversification

The 3 months correlation between IShares and AdvisorShares is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding iShares Intermediate Governmen and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares and IShares Intermediate 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 Intermediate GovernmentCredit 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 IShares Intermediate i.e., IShares Intermediate and AdvisorShares go up and down completely randomly.

Pair Corralation between IShares Intermediate and AdvisorShares

If you would invest  4,471  in AdvisorShares on September 12, 2024 and sell it today you would earn a total of  0.00  from holding AdvisorShares or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	3.13%
Values	Daily Returns

iShares Intermediate Governmen  vs.  AdvisorShares

iShares Intermediate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Intermediate GovernmentCredit has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, IShares Intermediate is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

AdvisorShares

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, AdvisorShares is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Intermediate and AdvisorShares

The main advantage of trading using opposite IShares Intermediate and AdvisorShares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Intermediate 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.

The idea behind iShares Intermediate GovernmentCredit and AdvisorShares 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.