Correlation Between Avantis International and Avantis Equity
Can any of the company-specific risk be diversified away by investing in both Avantis International and Avantis Equity 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 Avantis Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis International Equity and Avantis Equity ETF, you can compare the effects of market volatilities on Avantis International and Avantis Equity 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 Avantis Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis International and Avantis Equity.
Diversification Opportunities for Avantis International and Avantis Equity
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avantis and Avantis is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Avantis International Equity and Avantis Equity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Equity ETF 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 Equity are associated (or correlated) with Avantis Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Equity ETF has no effect on the direction of Avantis International i.e., Avantis International and Avantis Equity go up and down completely randomly.
Pair Corralation between Avantis International and Avantis Equity
Given the investment horizon of 90 days Avantis International Equity is expected to under-perform the Avantis Equity. But the etf apears to be less risky and, when comparing its historical volatility, Avantis International Equity is 1.3 times less risky than Avantis Equity. The etf trades about -0.07 of its potential returns per unit of risk. The Avantis Equity ETF is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 9,611 in Avantis Equity ETF on August 31, 2024 and sell it today you would earn a total of 514.00 from holding Avantis Equity ETF or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Avantis International Equity vs. Avantis Equity ETF
Performance |
| Timeline |
| Avantis International |
| Avantis Equity ETF |
Avantis International and Avantis Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis International and Avantis Equity
The main advantage of trading using opposite Avantis International and Avantis Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis International position performs unexpectedly, Avantis Equity 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 Equity will offset losses from the drop in Avantis Equity's long position.| Avantis International vs. iShares ESG Aggregate | Avantis International vs. SPDR MSCI Emerging | Avantis International vs. Aquagold International | Avantis International vs. Thrivent High Yield |
| Avantis Equity vs. Avantis International Equity | Avantis Equity vs. Avantis Emerging Markets | Avantis Equity vs. Avantis Small Cap | Avantis Equity vs. Avantis International Small |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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