Correlation Between Avantis International and Pace High
Can any of the company-specific risk be diversified away by investing in both Avantis International and Pace High 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 Pace High 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 Pace High Yield, you can compare the effects of market volatilities on Avantis International and Pace High 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 Pace High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis International and Pace High.
Diversification Opportunities for Avantis International and Pace High
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avantis and Pace is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Avantis International Equity and Pace High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace High Yield 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 Pace High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace High Yield has no effect on the direction of Avantis International i.e., Avantis International and Pace High go up and down completely randomly.
Pair Corralation between Avantis International and Pace High
Assuming the 90 days horizon Avantis International Equity is expected to generate 4.55 times more return on investment than Pace High. However, Avantis International is 4.55 times more volatile than Pace High Yield. It trades about 0.07 of its potential returns per unit of risk. Pace High Yield is currently generating about 0.26 per unit of risk. If you would invest 1,096 in Avantis International Equity on September 2, 2024 and sell it today you would earn a total of 147.00 from holding Avantis International Equity or generate 13.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis International Equity vs. Pace High Yield
Performance |
| Timeline |
| Avantis International |
| Pace High Yield |
Avantis International and Pace High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis International and Pace High
The main advantage of trading using opposite Avantis International and Pace High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis International position performs unexpectedly, Pace High 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 Pace High will offset losses from the drop in Pace High's long position.| Avantis International vs. Avantis International Small | Avantis International vs. American Century Etf | Avantis International vs. American Century Etf | Avantis International vs. Avantis Emerging Markets |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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