Correlation Between American Century and Avantis International

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

By analyzing existing cross correlation between American Century ETF and Avantis International Large, you can compare the effects of market volatilities on American Century and Avantis International 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 American Century with a short position of Avantis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Avantis International.

Diversification Opportunities for American Century and Avantis International

-0.39

Correlation Coefficient

American Century  Avantis International

Very good diversification

The 3 months correlation between American and Avantis is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding American Century ETF and Avantis International Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International and American Century 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 American Century ETF are associated (or correlated) with Avantis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis International has no effect on the direction of American Century i.e., American Century and Avantis International go up and down completely randomly.

Pair Corralation between American Century and Avantis International

Given the investment horizon of 90 days American Century ETF is expected to under-perform the Avantis International. In addition to that, American Century is 1.02 times more volatile than Avantis International Large. It trades about -0.04 of its total potential returns per unit of risk. Avantis International Large is currently generating about 0.24 per unit of volatility. If you would invest  5,161  in Avantis International Large on December 21, 2024 and sell it today you would earn a total of  644.00  from holding Avantis International Large or generate 12.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

American Century ETF  vs.  Avantis International Large

American Century ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Century ETF has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, American Century is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Avantis International

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis International Large are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal forward indicators, Avantis International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with American Century and Avantis International

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

The idea behind American Century ETF and Avantis International Large 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..