Correlation Between Avantis Short and Avantis Us

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

By analyzing existing cross correlation between Avantis Short Term Fixed and Avantis Small Cap, you can compare the effects of market volatilities on Avantis Short and Avantis Us 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 Short with a short position of Avantis Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Short and Avantis Us.

Diversification Opportunities for Avantis Short and Avantis Us

-0.56

Correlation Coefficient

Avantis Short  Avantis Us

Excellent diversification

The 3 months correlation between Avantis and Avantis is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Short Term Fixed 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 Short 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 Short Term Fixed are associated (or correlated) with Avantis Us. 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 Short i.e., Avantis Short and Avantis Us go up and down completely randomly.

Pair Corralation between Avantis Short and Avantis Us

Assuming the 90 days horizon Avantis Short is expected to generate 6.34 times less return on investment than Avantis Us. But when comparing it to its historical volatility, Avantis Short Term Fixed is 9.63 times less risky than Avantis Us. It trades about 0.14 of its potential returns per unit of risk. Avantis Small Cap is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,662  in Avantis Small Cap on September 3, 2024 and sell it today you would earn a total of  268.00  from holding Avantis Small Cap or generate 16.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Avantis Short Term Fixed  vs.  Avantis Small Cap

Avantis Short Term

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantis Short Term Fixed has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Avantis Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Avantis Small Cap

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis Small Cap are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Avantis Us showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Avantis Short and Avantis Us

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

The idea behind Avantis Short Term Fixed and Avantis Small Cap 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.