Correlation Between Avantis International and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Avantis International and Dow Jones 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 Dow Jones 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 Dow Jones Industrial, you can compare the effects of market volatilities on Avantis International and Dow Jones 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 Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis International and Dow Jones.
Diversification Opportunities for Avantis International and Dow Jones
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avantis and Dow is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Avantis International Small and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial 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 Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Avantis International i.e., Avantis International and Dow Jones go up and down completely randomly.
Pair Corralation between Avantis International and Dow Jones
Given the investment horizon of 90 days Avantis International Small is expected to under-perform the Dow Jones. But the etf apears to be less risky and, when comparing its historical volatility, Avantis International Small is 1.27 times less risky than Dow Jones. The etf trades about -0.09 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,238,757 in Dow Jones Industrial on August 28, 2024 and sell it today you would earn a total of 247,274 from holding Dow Jones Industrial or generate 5.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis International Small vs. Dow Jones Industrial
Performance |
| Timeline |
Avantis International and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Avantis International Small
Pair trading matchups for Avantis International
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Avantis International and Dow Jones
The main advantage of trading using opposite Avantis International and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis International position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Avantis International vs. Avantis Small Cap | Avantis International vs. Avantis Emerging Markets | Avantis International vs. Avantis International Equity | Avantis International vs. Avantis Equity ETF |
| Dow Jones vs. CECO Environmental Corp | Dow Jones vs. Western Acquisition Ventures | Dow Jones vs. Tyson Foods | Dow Jones vs. Inflection Point Acquisition |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |