Correlation Between Avantis Emerging and IShares Small
Can any of the company-specific risk be diversified away by investing in both Avantis Emerging and IShares 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 IShares 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 iShares Small Cap, you can compare the effects of market volatilities on Avantis Emerging and IShares 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 IShares Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Emerging and IShares Small.
Diversification Opportunities for Avantis Emerging and IShares Small
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Avantis and IShares is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Emerging Markets and iShares Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 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 IShares Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Small Cap has no effect on the direction of Avantis Emerging i.e., Avantis Emerging and IShares Small go up and down completely randomly.
Pair Corralation between Avantis Emerging and IShares Small
Given the investment horizon of 90 days Avantis Emerging Markets is expected to generate 0.73 times more return on investment than IShares Small. However, Avantis Emerging Markets is 1.36 times less risky than IShares Small. It trades about 0.12 of its potential returns per unit of risk. iShares Small Cap is currently generating about -0.07 per unit of risk. If you would invest 4,871 in Avantis Emerging Markets on September 13, 2024 and sell it today you would earn a total of 75.32 from holding Avantis Emerging Markets or generate 1.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Emerging Markets vs. iShares Small Cap
Performance |
| Timeline |
| Avantis Emerging Markets |
| iShares Small Cap |
Avantis Emerging and IShares Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Emerging and IShares Small
The main advantage of trading using opposite Avantis Emerging and IShares Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Emerging position performs unexpectedly, IShares 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 IShares Small will offset losses from the drop in IShares Small'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 |
| IShares Small vs. Horizon Kinetics Inflation | IShares Small vs. Virtus ETF Trust | IShares Small vs. Invesco SP SmallCap | IShares Small vs. iShares MSCI USA |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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