Correlation Between Proshares Russell and AdvisorShares Pure

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

By analyzing existing cross correlation between Proshares Russell 2000 and AdvisorShares Pure Cannabis, you can compare the effects of market volatilities on Proshares Russell and AdvisorShares Pure 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 Proshares Russell with a short position of AdvisorShares Pure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Proshares Russell and AdvisorShares Pure.

Diversification Opportunities for Proshares Russell and AdvisorShares Pure

-0.61

Correlation Coefficient

Proshares Russell  AdvisorShares Pure

Excellent diversification

The 3 months correlation between Proshares and AdvisorShares is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Proshares Russell 2000 and AdvisorShares Pure Cannabis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares Pure and Proshares Russell 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 Proshares Russell 2000 are associated (or correlated) with AdvisorShares Pure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AdvisorShares Pure has no effect on the direction of Proshares Russell i.e., Proshares Russell and AdvisorShares Pure go up and down completely randomly.

Pair Corralation between Proshares Russell and AdvisorShares Pure

Given the investment horizon of 90 days Proshares Russell 2000 is expected to generate 0.19 times more return on investment than AdvisorShares Pure. However, Proshares Russell 2000 is 5.4 times less risky than AdvisorShares Pure. It trades about 0.18 of its potential returns per unit of risk. AdvisorShares Pure Cannabis is currently generating about -0.05 per unit of risk. If you would invest  3,913  in Proshares Russell 2000 on August 30, 2024 and sell it today you would earn a total of  472.50  from holding Proshares Russell 2000 or generate 12.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.31%
Values	Daily Returns

Proshares Russell 2000  vs.  AdvisorShares Pure Cannabis

Proshares Russell 2000

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Proshares Russell 2000 are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Proshares Russell may actually be approaching a critical reversion point that can send shares even higher in December 2024.

AdvisorShares Pure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AdvisorShares Pure Cannabis has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

Pair Trading with Proshares Russell and AdvisorShares Pure

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

The idea behind Proshares Russell 2000 and AdvisorShares Pure Cannabis 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.