Correlation Between Avantis International and Schwab Fundamental
Can any of the company-specific risk be diversified away by investing in both Avantis International and Schwab Fundamental 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 Schwab Fundamental 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 Schwab Fundamental International, you can compare the effects of market volatilities on Avantis International and Schwab Fundamental 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 Schwab Fundamental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis International and Schwab Fundamental.
Diversification Opportunities for Avantis International and Schwab Fundamental
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Avantis and Schwab is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Avantis International Small and Schwab Fundamental Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Fundamental 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 Schwab Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Fundamental has no effect on the direction of Avantis International i.e., Avantis International and Schwab Fundamental go up and down completely randomly.
Pair Corralation between Avantis International and Schwab Fundamental
Given the investment horizon of 90 days Avantis International Small is expected to generate 1.14 times more return on investment than Schwab Fundamental. However, Avantis International is 1.14 times more volatile than Schwab Fundamental International. It trades about 0.08 of its potential returns per unit of risk. Schwab Fundamental International is currently generating about 0.07 per unit of risk. If you would invest 5,503 in Avantis International Small on August 25, 2024 and sell it today you would earn a total of 1,189 from holding Avantis International Small or generate 21.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis International Small vs. Schwab Fundamental Internation
Performance |
| Timeline |
| Avantis International |
| Schwab Fundamental |
Avantis International and Schwab Fundamental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis International and Schwab Fundamental
The main advantage of trading using opposite Avantis International and Schwab Fundamental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis International position performs unexpectedly, Schwab Fundamental 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 Schwab Fundamental will offset losses from the drop in Schwab Fundamental's long position.The idea behind Avantis International Small and Schwab Fundamental International pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Schwab Fundamental vs. Dimensional Targeted Value | Schwab Fundamental vs. Dimensional Small Cap | Schwab Fundamental vs. Dimensional Marketwide Value | Schwab Fundamental vs. Dimensional Core Equity |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |