Correlation Between American Century and Avantis Equity
Can any of the company-specific risk be diversified away by investing in both American Century and Avantis Equity 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 Equity 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 Equity ETF, you can compare the effects of market volatilities on American Century and Avantis Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Avantis Equity.
Diversification Opportunities for American Century and Avantis Equity
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and Avantis is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding American Century ETF and Avantis Equity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Equity ETF 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 Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Equity ETF has no effect on the direction of American Century i.e., American Century and Avantis Equity go up and down completely randomly.
Pair Corralation between American Century and Avantis Equity
Given the investment horizon of 90 days American Century ETF is expected to generate 1.01 times more return on investment than Avantis Equity. However, American Century is 1.01 times more volatile than Avantis Equity ETF. It trades about 0.31 of its potential returns per unit of risk. Avantis Equity ETF is currently generating about 0.25 per unit of risk. If you would invest 6,642 in American Century ETF on August 31, 2024 and sell it today you would earn a total of 451.00 from holding American Century ETF or generate 6.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Century ETF vs. Avantis Equity ETF
Performance |
| Timeline |
| American Century ETF |
| Avantis Equity ETF |
American Century and Avantis Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Avantis Equity
The main advantage of trading using opposite American Century and Avantis Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Avantis Equity 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 Equity will offset losses from the drop in Avantis Equity's long position.| American Century vs. Avantis Emerging Markets | American Century vs. Avantis Emerging Markets | American Century vs. Avantis Equity ETF | American Century vs. Avantis International Large |
| Avantis Equity vs. Avantis International Equity | Avantis Equity vs. Avantis Emerging Markets | Avantis Equity vs. Avantis Small Cap | Avantis Equity vs. Avantis International Small |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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