Correlation Between Avantis Emerging and Vanguard Small
Can any of the company-specific risk be diversified away by investing in both Avantis Emerging and Vanguard Small 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 Vanguard Small 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 Vanguard Small Cap Value, you can compare the effects of market volatilities on Avantis Emerging and Vanguard Small 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 Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Emerging and Vanguard Small.
Diversification Opportunities for Avantis Emerging and Vanguard Small
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avantis and Vanguard is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Emerging Markets and Vanguard Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap 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 Vanguard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Avantis Emerging i.e., Avantis Emerging and Vanguard Small go up and down completely randomly.
Pair Corralation between Avantis Emerging and Vanguard Small
Given the investment horizon of 90 days Avantis Emerging Markets is expected to under-perform the Vanguard Small. But the etf apears to be less risky and, when comparing its historical volatility, Avantis Emerging Markets is 1.09 times less risky than Vanguard Small. The etf trades about -0.11 of its potential returns per unit of risk. The Vanguard Small Cap Value is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 20,214 in Vanguard Small Cap Value on September 13, 2024 and sell it today you would earn a total of 798.00 from holding Vanguard Small Cap Value or generate 3.95% 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. Vanguard Small Cap Value
Performance |
| Timeline |
| Avantis Emerging Markets |
| Vanguard Small Cap |
Avantis Emerging and Vanguard Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Emerging and Vanguard Small
The main advantage of trading using opposite Avantis Emerging and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Emerging position performs unexpectedly, Vanguard Small 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 Vanguard Small will offset losses from the drop in Vanguard Small'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 |
| Vanguard Small vs. Vanguard Mid Cap Value | Vanguard Small vs. Vanguard Small Cap Growth | Vanguard Small vs. Vanguard Value Index | Vanguard Small vs. Vanguard Small Cap Index |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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