Correlation Between IShares Environmentally and Avantis Emerging

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

By analyzing existing cross correlation between iShares Environmentally Aware and Avantis Emerging Markets, you can compare the effects of market volatilities on IShares Environmentally and Avantis Emerging 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 IShares Environmentally with a short position of Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Environmentally and Avantis Emerging.

Diversification Opportunities for IShares Environmentally and Avantis Emerging

0.45

Correlation Coefficient

IShares Environmentally  Avantis Emerging

Very weak diversification

The 3 months correlation between IShares and Avantis is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding iShares Environmentally Aware and Avantis Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Emerging Markets and IShares Environmentally 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 iShares Environmentally Aware are associated (or correlated) with Avantis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Emerging Markets has no effect on the direction of IShares Environmentally i.e., IShares Environmentally and Avantis Emerging go up and down completely randomly.

Pair Corralation between IShares Environmentally and Avantis Emerging

Given the investment horizon of 90 days iShares Environmentally Aware is expected to under-perform the Avantis Emerging. But the etf apears to be less risky and, when comparing its historical volatility, iShares Environmentally Aware is 1.02 times less risky than Avantis Emerging. The etf trades about -0.04 of its potential returns per unit of risk. The Avantis Emerging Markets is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  4,808  in Avantis Emerging Markets on September 15, 2024 and sell it today you would earn a total of  124.00  from holding Avantis Emerging Markets or generate 2.58% return on investment over 90 days.

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

iShares Environmentally Aware  vs.  Avantis Emerging Markets

iShares Environmentally

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Environmentally Aware has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Etf's technical and fundamental 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 Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantis Emerging Markets has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Avantis Emerging is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Environmentally and Avantis Emerging

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

The idea behind iShares Environmentally Aware and Avantis Emerging Markets 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.