Correlation Between AdvisorShares Pure and IndexIQ ETF

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

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

Diversification Opportunities for AdvisorShares Pure and IndexIQ ETF

0.82

Correlation Coefficient

AdvisorShares Pure  IndexIQ ETF

Very poor diversification

The 3 months correlation between AdvisorShares and IndexIQ is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AdvisorShares Pure Cannabis and IndexIQ ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IndexIQ ETF Trust and AdvisorShares Pure 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 Pure Cannabis are associated (or correlated) with IndexIQ ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IndexIQ ETF Trust has no effect on the direction of AdvisorShares Pure i.e., AdvisorShares Pure and IndexIQ ETF go up and down completely randomly.

Pair Corralation between AdvisorShares Pure and IndexIQ ETF

Given the investment horizon of 90 days AdvisorShares Pure Cannabis is expected to under-perform the IndexIQ ETF. In addition to that, AdvisorShares Pure is 4.42 times more volatile than IndexIQ ETF Trust. It trades about -0.22 of its total potential returns per unit of risk. IndexIQ ETF Trust is currently generating about -0.22 per unit of volatility. If you would invest  2,117  in IndexIQ ETF Trust on September 23, 2024 and sell it today you would lose (79.00) from holding IndexIQ ETF Trust or give up 3.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

AdvisorShares Pure Cannabis  vs.  IndexIQ ETF Trust

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 fragile performance in the last few months, the Etf's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the exchange-traded fund private investors.

IndexIQ ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IndexIQ ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Etf's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

Pair Trading with AdvisorShares Pure and IndexIQ ETF

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

The idea behind AdvisorShares Pure Cannabis and IndexIQ ETF Trust 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.