Correlation Between Avantis Large and Mid Cap
Can any of the company-specific risk be diversified away by investing in both Avantis Large and Mid Cap 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 Mid Cap 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 Mid Cap Index, you can compare the effects of market volatilities on Avantis Large and Mid Cap 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 Mid Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Large and Mid Cap.
Diversification Opportunities for Avantis Large and Mid Cap
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Avantis and Mid is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Large Cap and Mid Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mid Cap Index 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 Mid Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mid Cap Index has no effect on the direction of Avantis Large i.e., Avantis Large and Mid Cap go up and down completely randomly.
Pair Corralation between Avantis Large and Mid Cap
Assuming the 90 days horizon Avantis Large Cap is expected to generate 0.84 times more return on investment than Mid Cap. However, Avantis Large Cap is 1.19 times less risky than Mid Cap. It trades about 0.08 of its potential returns per unit of risk. Mid Cap Index is currently generating about 0.07 per unit of risk. If you would invest 1,058 in Avantis Large Cap on September 14, 2024 and sell it today you would earn a total of 428.00 from holding Avantis Large Cap or generate 40.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Large Cap vs. Mid Cap Index
Performance |
| Timeline |
| Avantis Large Cap |
| Mid Cap Index |
Avantis Large and Mid Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Large and Mid Cap
The main advantage of trading using opposite Avantis Large and Mid Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Large position performs unexpectedly, Mid Cap 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 Mid Cap will offset losses from the drop in Mid Cap's long position.| Avantis Large vs. Ab Global Real | Avantis Large vs. Ab Global Bond | Avantis Large vs. Barings Global Floating | Avantis Large vs. Franklin Mutual Global |
| Mid Cap vs. Avantis Large Cap | Mid Cap vs. Lord Abbett Affiliated | Mid Cap vs. Dana Large Cap | Mid Cap vs. Jhancock Disciplined Value |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
Other Complementary Tools
| Content Syndication Quickly integrate customizable finance content to your own investment portal | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |