Correlation Between Avantis Us and Pender Real

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

By analyzing existing cross correlation between Avantis Small Cap and Pender Real Estate, you can compare the effects of market volatilities on Avantis Us and Pender Real 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 Pender Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Us and Pender Real.

Diversification Opportunities for Avantis Us and Pender Real

-0.7

Correlation Coefficient

Avantis Us  Pender Real

Excellent diversification

The 3 months correlation between Avantis and Pender is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Small Cap and Pender Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pender Real Estate 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 Small Cap are associated (or correlated) with Pender Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pender Real Estate has no effect on the direction of Avantis Us i.e., Avantis Us and Pender Real go up and down completely randomly.

Pair Corralation between Avantis Us and Pender Real

Assuming the 90 days horizon Avantis Small Cap is expected to under-perform the Pender Real. In addition to that, Avantis Us is 11.59 times more volatile than Pender Real Estate. It trades about -0.22 of its total potential returns per unit of risk. Pender Real Estate is currently generating about 0.21 per unit of volatility. If you would invest  991.00  in Pender Real Estate on December 2, 2024 and sell it today you would earn a total of  12.00  from holding Pender Real Estate or generate 1.21% return on investment over 90 days.

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

Avantis Small Cap  vs.  Pender Real Estate

Avantis Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Avantis Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pender Real Estate

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pender Real Estate are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Pender Real 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 Pender Real

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

The idea behind Avantis Small Cap and Pender Real Estate 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.