Correlation Between American Century and Avantis Small
Can any of the company-specific risk be diversified away by investing in both American Century and Avantis 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 American Century and Avantis Small 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 Small Cap, you can compare the effects of market volatilities on American Century and Avantis 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 American Century with a short position of Avantis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Century and Avantis Small.
Diversification Opportunities for American Century and Avantis Small
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Avantis is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Century ETF and Avantis Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Small Cap 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 Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Small Cap has no effect on the direction of American Century i.e., American Century and Avantis Small go up and down completely randomly.
Pair Corralation between American Century and Avantis Small
Given the investment horizon of 90 days American Century is expected to generate 1.15 times less return on investment than Avantis Small. But when comparing it to its historical volatility, American Century ETF is 1.76 times less risky than Avantis Small. It trades about 0.23 of its potential returns per unit of risk. Avantis Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 9,283 in Avantis Small Cap on September 2, 2024 and sell it today you would earn a total of 1,266 from holding Avantis Small Cap or generate 13.64% 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 Small Cap
Performance |
| Timeline |
| American Century ETF |
| Avantis Small Cap |
American Century and Avantis Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Century and Avantis Small
The main advantage of trading using opposite American Century and Avantis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Century position performs unexpectedly, Avantis 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 Avantis Small will offset losses from the drop in Avantis Small'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 Small vs. Dimensional ETF Trust | Avantis Small vs. Vanguard Small Cap Index | Avantis Small vs. First Trust Multi Manager | Avantis Small vs. Vanguard SP Small 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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