Correlation Between Avantis Emerging and IShares SP
Can any of the company-specific risk be diversified away by investing in both Avantis Emerging and IShares SP 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 Emerging and IShares SP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis Emerging Markets and iShares SP Small Cap, you can compare the effects of market volatilities on Avantis Emerging and IShares SP 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 Emerging with a short position of IShares SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Emerging and IShares SP.
Diversification Opportunities for Avantis Emerging and IShares SP
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avantis and IShares is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Emerging Markets and iShares SP Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares SP Small and Avantis Emerging 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 Emerging Markets are associated (or correlated) with IShares SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares SP Small has no effect on the direction of Avantis Emerging i.e., Avantis Emerging and IShares SP go up and down completely randomly.
Pair Corralation between Avantis Emerging and IShares SP
Given the investment horizon of 90 days Avantis Emerging is expected to generate 1.19 times less return on investment than IShares SP. But when comparing it to its historical volatility, Avantis Emerging Markets is 1.37 times less risky than IShares SP. It trades about 0.06 of its potential returns per unit of risk. iShares SP Small Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 8,781 in iShares SP Small Cap on September 12, 2024 and sell it today you would earn a total of 2,857 from holding iShares SP Small Cap or generate 32.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Emerging Markets vs. iShares SP Small Cap
Performance |
| Timeline |
| Avantis Emerging Markets |
| iShares SP Small |
Avantis Emerging and IShares SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Emerging and IShares SP
The main advantage of trading using opposite Avantis Emerging and IShares SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Emerging position performs unexpectedly, IShares SP 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 IShares SP will offset losses from the drop in IShares SP's long position.| Avantis Emerging vs. Global X MSCI | Avantis Emerging vs. Global X Alternative | Avantis Emerging vs. iShares Emerging Markets | Avantis Emerging vs. Global X SuperDividend |
| IShares SP vs. American Sierra Gold | IShares SP vs. American Century ETF | IShares SP vs. Avantis Emerging Markets | IShares SP vs. Avantis Emerging Markets |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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