Correlation Between AdvisorShares and Nuveen NASDAQ

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

By analyzing existing cross correlation between AdvisorShares and Nuveen NASDAQ 100, you can compare the effects of market volatilities on AdvisorShares and Nuveen NASDAQ 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 with a short position of Nuveen NASDAQ. Check out your portfolio center. Please also check ongoing floating volatility patterns of AdvisorShares and Nuveen NASDAQ.

Diversification Opportunities for AdvisorShares and Nuveen NASDAQ

0.71

Correlation Coefficient

AdvisorShares  Nuveen NASDAQ

Poor diversification

The 3 months correlation between AdvisorShares and Nuveen is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares and Nuveen NASDAQ 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen NASDAQ 100 and AdvisorShares 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 are associated (or correlated) with Nuveen NASDAQ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen NASDAQ 100 has no effect on the direction of AdvisorShares i.e., AdvisorShares and Nuveen NASDAQ go up and down completely randomly.

Pair Corralation between AdvisorShares and Nuveen NASDAQ

If you would invest  2,441  in Nuveen NASDAQ 100 on September 22, 2024 and sell it today you would earn a total of  200.00  from holding Nuveen NASDAQ 100 or generate 8.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.54%
Values	Daily Returns

AdvisorShares  vs.  Nuveen NASDAQ 100

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. Despite somewhat strong basic indicators, AdvisorShares is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Nuveen NASDAQ 100

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nuveen NASDAQ 100 are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Nuveen NASDAQ may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with AdvisorShares and Nuveen NASDAQ

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

The idea behind AdvisorShares and Nuveen NASDAQ 100 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.