Correlation Between Avantis Emerging and Avantis Small
Can any of the company-specific risk be diversified away by investing in both Avantis Emerging and Avantis Small 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 Emerging and Avantis Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis Emerging Markets and Avantis Small Cap, you can compare the effects of market volatilities on Avantis Emerging and Avantis Small 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 Emerging with a short position of Avantis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Emerging and Avantis Small.
Diversification Opportunities for Avantis Emerging and Avantis Small
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avantis and Avantis is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Emerging Markets and Avantis Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Small Cap and Avantis Emerging 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 Emerging Markets are associated (or correlated) with Avantis Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Small Cap has no effect on the direction of Avantis Emerging i.e., Avantis Emerging and Avantis Small go up and down completely randomly.
Pair Corralation between Avantis Emerging and Avantis Small
Given the investment horizon of 90 days Avantis Emerging Markets is expected to generate 0.75 times more return on investment than Avantis Small. However, Avantis Emerging Markets is 1.34 times less risky than Avantis Small. It trades about 0.05 of its potential returns per unit of risk. Avantis Small Cap is currently generating about -0.13 per unit of risk. If you would invest 4,628 in Avantis Emerging Markets on December 28, 2024 and sell it today you would earn a total of 113.00 from holding Avantis Emerging Markets or generate 2.44% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Avantis Emerging Markets vs. Avantis Small Cap
Performance |
Timeline |
Avantis Emerging Markets |
Avantis Small Cap |
Avantis Emerging and Avantis Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Avantis Emerging and Avantis Small
The main advantage of trading using opposite Avantis Emerging and Avantis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Emerging position performs unexpectedly, Avantis Small 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 Avantis Small will offset losses from the drop in Avantis Small's long position.Avantis Emerging vs. Avantis International Small | Avantis Emerging vs. Avantis Small Cap | Avantis Emerging vs. Avantis Emerging Markets | Avantis Emerging vs. American Century ETF |
Avantis Small vs. Dimensional ETF Trust | Avantis Small vs. Vanguard Small Cap Index | Avantis Small vs. First Trust Multi Manager | Avantis Small vs. Vanguard SP Small Cap |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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