Correlation Between Avantis International and Schwab Government

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Can any of the company-specific risk be diversified away by investing in both Avantis International and Schwab Government 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 Avantis International and Schwab Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis International Equity and Schwab Government Money, you can compare the effects of market volatilities on Avantis International and Schwab Government 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 Avantis International with a short position of Schwab Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis International and Schwab Government.

Diversification Opportunities for Avantis International and Schwab Government

AvantisSchwabDiversified AwayAvantisSchwabDiversified Away100%
0.17
  Correlation Coefficient

Average diversification

The 3 months correlation between Avantis and Schwab is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Avantis International Equity and Schwab Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Government Money and Avantis International 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 Avantis International Equity are associated (or correlated) with Schwab Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Government Money has no effect on the direction of Avantis International i.e., Avantis International and Schwab Government go up and down completely randomly.

Pair Corralation between Avantis International and Schwab Government

Assuming the 90 days horizon Avantis International Equity is expected to generate 5.51 times more return on investment than Schwab Government. However, Avantis International is 5.51 times more volatile than Schwab Government Money. It trades about 0.16 of its potential returns per unit of risk. Schwab Government Money is currently generating about 0.13 per unit of risk. If you would invest  1,179  in Avantis International Equity on November 21, 2024 and sell it today you would earn a total of  80.00  from holding Avantis International Equity or generate 6.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.33%
ValuesDaily Returns

Avantis International Equity  vs.  Schwab Government Money

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -4-3-2-1012
JavaScript chart by amCharts 3.21.15AVDEX SWGXX
       Timeline  
Avantis International 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Avantis International Equity are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Avantis International may actually be approaching a critical reversion point that can send shares even higher in March 2025.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb11.611.81212.212.412.6
Schwab Government Money 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Schwab Government Money are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Schwab Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.990.9920.9940.9960.9981

Avantis International and Schwab Government Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.22-1.64-1.06-0.480.05940.631.211.792.372.95 5101520
JavaScript chart by amCharts 3.21.15AVDEX SWGXX
       Returns  

Pair Trading with Avantis International and Schwab Government

The main advantage of trading using opposite Avantis International and Schwab Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis International position performs unexpectedly, Schwab Government 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 Schwab Government will offset losses from the drop in Schwab Government's long position.
The idea behind Avantis International Equity and Schwab Government Money 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.

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