Correlation Between Avantis Us and Vanguard Total

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

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

Diversification Opportunities for Avantis Us and Vanguard Total

1.0

Correlation Coefficient

Avantis Us  Vanguard Total

No risk reduction

The 3 months correlation between Avantis and Vanguard is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Equity and Vanguard Total Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Total Stock and Avantis Us 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 Equity are associated (or correlated) with Vanguard Total. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Total Stock has no effect on the direction of Avantis Us i.e., Avantis Us and Vanguard Total go up and down completely randomly.

Pair Corralation between Avantis Us and Vanguard Total

Assuming the 90 days horizon Avantis Equity is expected to generate 1.0 times more return on investment than Vanguard Total. However, Avantis Us is 1.0 times more volatile than Vanguard Total Stock. It trades about -0.04 of its potential returns per unit of risk. Vanguard Total Stock is currently generating about -0.09 per unit of risk. If you would invest  1,850  in Avantis Equity on December 30, 2024 and sell it today you would lose (58.00) from holding Avantis Equity or give up 3.14% of portfolio value over 90 days.

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

Avantis Equity  vs.  Vanguard Total Stock

Avantis Equity

Risk-Adjusted Performance

Very Weak

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

Vanguard Total Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Total Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Vanguard Total is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Avantis Us and Vanguard Total

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

The idea behind Avantis Equity and Vanguard Total Stock 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.