Correlation Between Avantis Emerging and Avantis Equity
Can any of the company-specific risk be diversified away by investing in both Avantis Emerging and Avantis Equity 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 Avantis Equity 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 Avantis Equity ETF, you can compare the effects of market volatilities on Avantis Emerging and Avantis Equity 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 Avantis Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Emerging and Avantis Equity.
Diversification Opportunities for Avantis Emerging and Avantis Equity
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avantis and Avantis is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Emerging Markets and Avantis Equity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Equity ETF 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 Avantis Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Equity ETF has no effect on the direction of Avantis Emerging i.e., Avantis Emerging and Avantis Equity go up and down completely randomly.
Pair Corralation between Avantis Emerging and Avantis Equity
Given the investment horizon of 90 days Avantis Emerging Markets is expected to under-perform the Avantis Equity. But the etf apears to be less risky and, when comparing its historical volatility, Avantis Emerging Markets is 1.07 times less risky than Avantis Equity. The etf trades about -0.08 of its potential returns per unit of risk. The Avantis Equity ETF is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 9,793 in Avantis Equity ETF on October 24, 2024 and sell it today you would earn a total of 286.00 from holding Avantis Equity ETF or generate 2.92% 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. Avantis Equity ETF
Performance |
| Timeline |
| Avantis Emerging Markets |
| Avantis Equity ETF |
Avantis Emerging and Avantis Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Emerging and Avantis Equity
The main advantage of trading using opposite Avantis Emerging and Avantis Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Emerging position performs unexpectedly, Avantis Equity 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 Avantis Equity will offset losses from the drop in Avantis Equity's long position.| Avantis Emerging vs. Avantis International Small | Avantis Emerging vs. Avantis Small Cap | Avantis Emerging vs. Avantis Emerging Markets | Avantis Emerging vs. American Century ETF |
| Avantis Equity vs. Avantis International Equity | Avantis Equity vs. Avantis Emerging Markets | Avantis Equity vs. Avantis Small Cap | Avantis Equity vs. Avantis International Small |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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