Correlation Between Avantis Large and Federated Emerging
Can any of the company-specific risk be diversified away by investing in both Avantis Large and Federated 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 Avantis Large and Federated Emerging 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 Federated Emerging Market, you can compare the effects of market volatilities on Avantis Large and Federated 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 Avantis Large with a short position of Federated Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Large and Federated Emerging.
Diversification Opportunities for Avantis Large and Federated Emerging
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avantis and Federated is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Large Cap and Federated Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Emerging Market 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 Federated Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Emerging Market has no effect on the direction of Avantis Large i.e., Avantis Large and Federated Emerging go up and down completely randomly.
Pair Corralation between Avantis Large and Federated Emerging
Assuming the 90 days horizon Avantis Large Cap is expected to generate 3.31 times more return on investment than Federated Emerging. However, Avantis Large is 3.31 times more volatile than Federated Emerging Market. It trades about 0.09 of its potential returns per unit of risk. Federated Emerging Market is currently generating about 0.18 per unit of risk. If you would invest 1,340 in Avantis Large Cap on September 14, 2024 and sell it today you would earn a total of 136.00 from holding Avantis Large Cap or generate 10.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Large Cap vs. Federated Emerging Market
Performance |
| Timeline |
| Avantis Large Cap |
| Federated Emerging Market |
Avantis Large and Federated Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Large and Federated Emerging
The main advantage of trading using opposite Avantis Large and Federated Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Large position performs unexpectedly, Federated 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 Federated Emerging will offset losses from the drop in Federated Emerging's long position.| Avantis Large vs. Avantis International Small | Avantis Large vs. American Century Etf | Avantis Large vs. American Century Etf | Avantis Large vs. Avantis Emerging Markets |
| Federated Emerging vs. Federated Mdt All | Federated Emerging vs. Federated Mdt Balanced | Federated Emerging vs. Federated Global Allocation | Federated Emerging vs. Federated Hermes Emerging |
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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