Correlation Between Avantis International and Dimensional Small
Can any of the company-specific risk be diversified away by investing in both Avantis International and Dimensional 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 International and Dimensional Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis International Large and Dimensional Small Cap, you can compare the effects of market volatilities on Avantis International and Dimensional 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 International with a short position of Dimensional Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis International and Dimensional Small.
Diversification Opportunities for Avantis International and Dimensional Small
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avantis and Dimensional is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Avantis International Large and Dimensional Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Small Cap and Avantis International 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 International Large are associated (or correlated) with Dimensional Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Small Cap has no effect on the direction of Avantis International i.e., Avantis International and Dimensional Small go up and down completely randomly.
Pair Corralation between Avantis International and Dimensional Small
Given the investment horizon of 90 days Avantis International Large is expected to under-perform the Dimensional Small. But the etf apears to be less risky and, when comparing its historical volatility, Avantis International Large is 1.86 times less risky than Dimensional Small. The etf trades about 0.0 of its potential returns per unit of risk. The Dimensional Small Cap is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 6,447 in Dimensional Small Cap on September 3, 2024 and sell it today you would earn a total of 622.00 from holding Dimensional Small Cap or generate 9.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis International Large vs. Dimensional Small Cap
Performance |
| Timeline |
| Avantis International |
| Dimensional Small Cap |
Avantis International and Dimensional Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis International and Dimensional Small
The main advantage of trading using opposite Avantis International and Dimensional Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis International position performs unexpectedly, Dimensional 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 Dimensional Small will offset losses from the drop in Dimensional Small's long position.| Avantis International vs. American Century ETF | Avantis International vs. Avantis Emerging Markets | Avantis International vs. Avantis International Small | Avantis International vs. Avantis Emerging Markets |
| Dimensional Small vs. Dimensional Targeted Value | Dimensional Small vs. Dimensional Equity ETF | Dimensional Small vs. Dimensional Core Equity | Dimensional Small vs. Dimensional International Core |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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