Correlation Between TSJA and Avantis Emerging

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

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

Diversification Opportunities for TSJA and Avantis Emerging

0.0

Correlation Coefficient

TSJA  Avantis Emerging

Pay attention - limited upside

The 3 months correlation between TSJA and Avantis is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding TSJA 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 TSJA 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 TSJA 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 TSJA i.e., TSJA and Avantis Emerging go up and down completely randomly.

Pair Corralation between TSJA and Avantis Emerging

If you would invest  4,968  in Avantis Emerging Markets on December 28, 2024 and sell it today you would earn a total of  4.00  from holding Avantis Emerging Markets or generate 0.08% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

TSJA  vs.  Avantis Emerging Markets

TSJA

Risk-Adjusted Performance

Very Weak

Over the last 90 days TSJA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward-looking indicators, TSJA is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Avantis Emerging Markets

Risk-Adjusted Performance

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 rather sound basic indicators, Avantis Emerging is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with TSJA and Avantis Emerging

The main advantage of trading using opposite TSJA and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TSJA 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 TSJA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.