Correlation Between RiverFront Strategic and AdvisorShares

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

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

Diversification Opportunities for RiverFront Strategic and AdvisorShares

0.0

Correlation Coefficient

RiverFront Strategic  AdvisorShares

Pay attention - limited upside

The 3 months correlation between RiverFront and AdvisorShares is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding RiverFront Strategic Income and AdvisorShares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AdvisorShares and RiverFront Strategic 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 RiverFront Strategic Income 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 RiverFront Strategic i.e., RiverFront Strategic and AdvisorShares go up and down completely randomly.

Pair Corralation between RiverFront Strategic and AdvisorShares

Given the investment horizon of 90 days RiverFront Strategic Income is expected to generate 1.69 times more return on investment than AdvisorShares. However, RiverFront Strategic is 1.69 times more volatile than AdvisorShares. It trades about 0.05 of its potential returns per unit of risk. AdvisorShares is currently generating about 0.06 per unit of risk. If you would invest  2,142  in RiverFront Strategic Income on September 4, 2024 and sell it today you would earn a total of  185.00  from holding RiverFront Strategic Income or generate 8.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	27.85%
Values	Daily Returns

RiverFront Strategic Income  vs.  AdvisorShares

RiverFront Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RiverFront Strategic Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, RiverFront Strategic is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with RiverFront Strategic and AdvisorShares

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

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 Transaction History module to view history of all your transactions and understand their impact on performance.