Correlation Between Avantis International and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Avantis International and Pear Tree 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 International and Pear Tree into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis International Small and Pear Tree Polaris, you can compare the effects of market volatilities on Avantis International and Pear Tree 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 International with a short position of Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis International and Pear Tree.
Diversification Opportunities for Avantis International and Pear Tree
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Avantis and Pear is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Avantis International Small and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris and Avantis International 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 International Small are associated (or correlated) with Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Avantis International i.e., Avantis International and Pear Tree go up and down completely randomly.
Pair Corralation between Avantis International and Pear Tree
Assuming the 90 days horizon Avantis International Small is expected to generate 1.08 times more return on investment than Pear Tree. However, Avantis International is 1.08 times more volatile than Pear Tree Polaris. It trades about 0.07 of its potential returns per unit of risk. Pear Tree Polaris is currently generating about -0.14 per unit of risk. If you would invest 1,282 in Avantis International Small on September 2, 2024 and sell it today you would earn a total of 16.00 from holding Avantis International Small or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis International Small vs. Pear Tree Polaris
Performance |
| Timeline |
| Avantis International |
| Pear Tree Polaris |
Avantis International and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis International and Pear Tree
The main advantage of trading using opposite Avantis International and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis International position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.| Avantis International vs. American Century Etf | Avantis International vs. American Century Etf | Avantis International vs. Avantis Emerging Markets | Avantis International vs. Avantis International Equity |
| Pear Tree vs. Pear Tree Polaris | Pear Tree vs. Seafarer Overseas Growth | Pear Tree vs. International Fund International | Pear Tree vs. Lazard Global Listed |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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