Correlation Between Xtrackers International and Avantis Real

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

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

Diversification Opportunities for Xtrackers International and Avantis Real

0.85

Correlation Coefficient

Xtrackers International  Avantis Real

Very poor diversification

The 3 months correlation between Xtrackers and Avantis is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers International Real and Avantis Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Real Estate and Xtrackers International 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 Xtrackers International Real are associated (or correlated) with Avantis Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Real Estate has no effect on the direction of Xtrackers International i.e., Xtrackers International and Avantis Real go up and down completely randomly.

Pair Corralation between Xtrackers International and Avantis Real

Given the investment horizon of 90 days Xtrackers International Real is expected to under-perform the Avantis Real. In addition to that, Xtrackers International is 1.02 times more volatile than Avantis Real Estate. It trades about -0.23 of its total potential returns per unit of risk. Avantis Real Estate is currently generating about -0.1 per unit of volatility. If you would invest  4,584  in Avantis Real Estate on September 13, 2024 and sell it today you would lose (175.00) from holding Avantis Real Estate or give up 3.82% of portfolio value over 90 days.

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

Xtrackers International Real  vs.  Avantis Real Estate

Xtrackers International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtrackers International Real 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 strong and the current disturbance on Wall Street may also be a sign of long term gains for the ETF investors.

Avantis Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avantis Real Estate 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Xtrackers International and Avantis Real

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

The idea behind Xtrackers International Real and Avantis 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.