Correlation Between Avantis International and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Avantis International and IShares MSCI 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 IShares MSCI 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 iShares MSCI EAFE, you can compare the effects of market volatilities on Avantis International and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis International and IShares MSCI.
Diversification Opportunities for Avantis International and IShares MSCI
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Avantis and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Avantis International Large and iShares MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI EAFE 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI EAFE has no effect on the direction of Avantis International i.e., Avantis International and IShares MSCI go up and down completely randomly.
Pair Corralation between Avantis International and IShares MSCI
Given the investment horizon of 90 days Avantis International is expected to generate 1.02 times less return on investment than IShares MSCI. In addition to that, Avantis International is 1.04 times more volatile than iShares MSCI EAFE. It trades about 0.06 of its total potential returns per unit of risk. iShares MSCI EAFE is currently generating about 0.07 per unit of volatility. If you would invest 4,884 in iShares MSCI EAFE on September 4, 2024 and sell it today you would earn a total of 608.00 from holding iShares MSCI EAFE or generate 12.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis International Large vs. iShares MSCI EAFE
Performance |
| Timeline |
| Avantis International |
| iShares MSCI EAFE |
Avantis International and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis International and IShares MSCI
The main advantage of trading using opposite Avantis International and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis International position performs unexpectedly, IShares MSCI 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 MSCI will offset losses from the drop in IShares MSCI's long position.| Avantis International vs. iShares MSCI EAFE | Avantis International vs. Vanguard International High | Avantis International vs. iShares International Select |
| IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. iShares MSCI EAFE | IShares MSCI vs. WisdomTree International SmallCap | IShares MSCI vs. iShares Russell Mid Cap |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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