Correlation Between Avantis Us and American Funds
Can any of the company-specific risk be diversified away by investing in both Avantis Us and American Funds 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 Us and American Funds 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 American Funds 2040, you can compare the effects of market volatilities on Avantis Us and American Funds 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 Us with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Us and American Funds.
Diversification Opportunities for Avantis Us and American Funds
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Avantis and American is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Large Cap and American Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 and Avantis Us 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2040 has no effect on the direction of Avantis Us i.e., Avantis Us and American Funds go up and down completely randomly.
Pair Corralation between Avantis Us and American Funds
Assuming the 90 days horizon Avantis Large Cap is expected to generate 1.89 times more return on investment than American Funds. However, Avantis Us is 1.89 times more volatile than American Funds 2040. It trades about 0.38 of its potential returns per unit of risk. American Funds 2040 is currently generating about 0.26 per unit of risk. If you would invest 1,422 in Avantis Large Cap on September 3, 2024 and sell it today you would earn a total of 115.00 from holding Avantis Large Cap or generate 8.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Large Cap vs. American Funds 2040
Performance |
| Timeline |
| Avantis Large Cap |
| American Funds 2040 |
Avantis Us and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Us and American Funds
The main advantage of trading using opposite Avantis Us and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Us position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Avantis Us vs. Aqr Long Short Equity | Avantis Us vs. Rbc Short Duration | Avantis Us vs. Goldman Sachs Short | Avantis Us vs. Ab Select Longshort |
| American Funds vs. Avantis Large Cap | American Funds vs. Transamerica Large Cap | American Funds vs. Vanguard Windsor Fund | American Funds vs. American Mutual Fund |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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