Correlation Between Avantis Large and Avantis International
Can any of the company-specific risk be diversified away by investing in both Avantis Large 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 Avantis Large and Avantis International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis Large Cap and Avantis International Equity, you can compare the effects of market volatilities on Avantis Large 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 Avantis Large with a short position of Avantis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Large and Avantis International.
Diversification Opportunities for Avantis Large and Avantis International
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avantis and Avantis is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Large Cap and Avantis International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International and Avantis Large 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 Avantis Large 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 Avantis Large i.e., Avantis Large and Avantis International go up and down completely randomly.
Pair Corralation between Avantis Large and Avantis International
Assuming the 90 days horizon Avantis Large Cap is expected to generate 1.01 times more return on investment than Avantis International. However, Avantis Large is 1.01 times more volatile than Avantis International Equity. It trades about 0.12 of its potential returns per unit of risk. Avantis International Equity is currently generating about 0.05 per unit of risk. If you would invest 1,085 in Avantis Large Cap on August 31, 2024 and sell it today you would earn a total of 447.00 from holding Avantis Large Cap or generate 41.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Large Cap vs. Avantis International Equity
Performance |
| Timeline |
| Avantis Large Cap |
| Avantis International |
Avantis Large and Avantis International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Large and Avantis International
The main advantage of trading using opposite Avantis Large and Avantis International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Large 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.| Avantis Large vs. The Gabelli Small | Avantis Large vs. Sentinel Small Pany | Avantis Large vs. Small Cap Stock | Avantis Large vs. Jhancock Diversified Macro |
| Avantis International vs. Pace High Yield | Avantis International vs. Fidelity Capital Income | Avantis International vs. Multi Manager High Yield | Avantis International vs. Prudential Short Duration |
Check out your portfolio center.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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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