Correlation Between American Century and Avantis International
Can any of the company-specific risk be diversified away by investing in both American Century and Avantis International 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 American Century and Avantis International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Century Etf and Avantis International Small, you can compare the effects of market volatilities on American Century and Avantis International 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 American Century with a short position of Avantis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Avantis International.
Diversification Opportunities for American Century and Avantis International
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Avantis is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding American Century Etf and Avantis International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International and American Century 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 American Century Etf are associated (or correlated) with Avantis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis International has no effect on the direction of American Century i.e., American Century and Avantis International go up and down completely randomly.
Pair Corralation between American Century and Avantis International
Assuming the 90 days horizon American Century Etf is expected to generate 0.37 times more return on investment than Avantis International. However, American Century Etf is 2.71 times less risky than Avantis International. It trades about -0.04 of its potential returns per unit of risk. Avantis International Small is currently generating about -0.03 per unit of risk. If you would invest 832.00 in American Century Etf on August 28, 2024 and sell it today you would lose (2.00) from holding American Century Etf or give up 0.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century Etf vs. Avantis International Small
Performance |
| Timeline |
| American Century Etf |
| Avantis International |
American Century and Avantis International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Avantis International
The main advantage of trading using opposite American Century and Avantis International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Avantis International 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 International will offset losses from the drop in Avantis International's long position.| American Century vs. Avantis International Small | American Century vs. Avantis International Equity | American Century vs. American Century Etf | American Century vs. Avantis Emerging Markets |
| Avantis International vs. American Century Etf | Avantis International vs. Avantis International Equity | Avantis International vs. American Century Etf | Avantis International 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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