Correlation Between Avantis Emerging and WisdomTree SmallCap
Can any of the company-specific risk be diversified away by investing in both Avantis Emerging and WisdomTree SmallCap 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 WisdomTree SmallCap 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 WisdomTree SmallCap Dividend, you can compare the effects of market volatilities on Avantis Emerging and WisdomTree SmallCap 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 WisdomTree SmallCap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Emerging and WisdomTree SmallCap.
Diversification Opportunities for Avantis Emerging and WisdomTree SmallCap
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avantis and WisdomTree is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Emerging Markets and WisdomTree SmallCap Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WisdomTree SmallCap 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 WisdomTree SmallCap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WisdomTree SmallCap has no effect on the direction of Avantis Emerging i.e., Avantis Emerging and WisdomTree SmallCap go up and down completely randomly.
Pair Corralation between Avantis Emerging and WisdomTree SmallCap
Given the investment horizon of 90 days Avantis Emerging Markets is expected to under-perform the WisdomTree SmallCap. In addition to that, Avantis Emerging is 1.22 times more volatile than WisdomTree SmallCap Dividend. It trades about -0.23 of its total potential returns per unit of risk. WisdomTree SmallCap Dividend is currently generating about -0.02 per unit of volatility. If you would invest 3,596 in WisdomTree SmallCap Dividend on September 20, 2024 and sell it today you would lose (16.00) from holding WisdomTree SmallCap Dividend or give up 0.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Emerging Markets vs. WisdomTree SmallCap Dividend
Performance |
| Timeline |
| Avantis Emerging Markets |
| WisdomTree SmallCap |
Avantis Emerging and WisdomTree SmallCap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Emerging and WisdomTree SmallCap
The main advantage of trading using opposite Avantis Emerging and WisdomTree SmallCap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Emerging position performs unexpectedly, WisdomTree SmallCap 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 WisdomTree SmallCap will offset losses from the drop in WisdomTree SmallCap'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 |
| WisdomTree SmallCap vs. American Sierra Gold | WisdomTree SmallCap vs. American Century ETF | WisdomTree SmallCap vs. Avantis Emerging Markets | WisdomTree SmallCap 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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