Correlation Between American Century and Avantis Emerging
Can any of the company-specific risk be diversified away by investing in both American Century and Avantis 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 American Century and Avantis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Etf and Avantis Emerging Markets, you can compare the effects of market volatilities on American Century and Avantis 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 American Century with a short position of Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Avantis Emerging.
Diversification Opportunities for American Century and Avantis Emerging
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Avantis is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding American Century Etf and Avantis Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Emerging Markets and American Century 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 American Century Etf are associated (or correlated) with Avantis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Emerging Markets has no effect on the direction of American Century i.e., American Century and Avantis Emerging go up and down completely randomly.
Pair Corralation between American Century and Avantis Emerging
Assuming the 90 days horizon American Century Etf is expected to generate 2.08 times more return on investment than Avantis Emerging. However, American Century is 2.08 times more volatile than Avantis Emerging Markets. It trades about 0.26 of its potential returns per unit of risk. Avantis Emerging Markets is currently generating about -0.19 per unit of risk. If you would invest 1,770 in American Century Etf on August 28, 2024 and sell it today you would earn a total of 182.00 from holding American Century Etf or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century Etf vs. Avantis Emerging Markets
Performance |
| Timeline |
| American Century Etf |
| Avantis Emerging Markets |
American Century and Avantis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Avantis Emerging
The main advantage of trading using opposite American Century and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Avantis 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 Avantis Emerging will offset losses from the drop in Avantis Emerging's long position.| American Century vs. Avantis International Small | American Century vs. American Century Etf | American Century vs. Avantis International Equity | American Century vs. Avantis Emerging Markets |
| Avantis Emerging vs. Avantis International Small | Avantis Emerging vs. American Century Etf | Avantis Emerging vs. Avantis International Equity | Avantis Emerging vs. American Century Etf |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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