Correlation Between Vanguard Mid and Avantis Real

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

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

Diversification Opportunities for Vanguard Mid and Avantis Real

0.11

Correlation Coefficient

Vanguard Mid  Avantis Real

Average diversification

The 3 months correlation between Vanguard and Avantis is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Mid Cap Index 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 Vanguard Mid 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 Vanguard Mid Cap Index 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 Vanguard Mid i.e., Vanguard Mid and Avantis Real go up and down completely randomly.

Pair Corralation between Vanguard Mid and Avantis Real

Allowing for the 90-day total investment horizon Vanguard Mid Cap Index is expected to under-perform the Avantis Real. In addition to that, Vanguard Mid is 1.0 times more volatile than Avantis Real Estate. It trades about -0.02 of its total potential returns per unit of risk. Avantis Real Estate is currently generating about 0.03 per unit of volatility. If you would invest  4,221  in Avantis Real Estate on December 26, 2024 and sell it today you would earn a total of  61.00  from holding Avantis Real Estate or generate 1.45% return on investment over 90 days.

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

Vanguard Mid Cap Index  vs.  Avantis Real Estate

Vanguard Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vanguard Mid Cap Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vanguard Mid is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Avantis Real Estate

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis Real Estate are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Avantis Real is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Vanguard Mid and Avantis Real

The main advantage of trading using opposite Vanguard Mid and Avantis Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Mid 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 Vanguard Mid Cap Index 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.