Correlation Between Dimensional Small and Avantis International

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

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

Diversification Opportunities for Dimensional Small and Avantis International

-0.65

Correlation Coefficient

Dimensional Small  Avantis International

Excellent diversification

The 3 months correlation between Dimensional and Avantis is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Small Cap and Avantis International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International and Dimensional Small 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 Dimensional Small Cap 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 Dimensional Small i.e., Dimensional Small and Avantis International go up and down completely randomly.

Pair Corralation between Dimensional Small and Avantis International

Given the investment horizon of 90 days Dimensional Small Cap is expected to under-perform the Avantis International. In addition to that, Dimensional Small is 1.27 times more volatile than Avantis International Small. It trades about -0.12 of its total potential returns per unit of risk. Avantis International Small is currently generating about 0.16 per unit of volatility. If you would invest  6,479  in Avantis International Small on December 30, 2024 and sell it today you would earn a total of  573.00  from holding Avantis International Small or generate 8.84% return on investment over 90 days.

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

Dimensional Small Cap  vs.  Avantis International Small

Dimensional Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dimensional Small Cap has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Avantis International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis International Small are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal fundamental indicators, Avantis International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dimensional Small and Avantis International

The main advantage of trading using opposite Dimensional Small and Avantis International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Small 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 Dimensional Small Cap and Avantis International Small 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.