Correlation Between Avantis Real and SPDR Dow
Can any of the company-specific risk be diversified away by investing in both Avantis Real and SPDR Dow 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 Real and SPDR Dow into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis Real Estate and SPDR Dow Jones, you can compare the effects of market volatilities on Avantis Real and SPDR Dow 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 Real with a short position of SPDR Dow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Real and SPDR Dow.
Diversification Opportunities for Avantis Real and SPDR Dow
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Avantis and SPDR is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Real Estate and SPDR Dow Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Dow Jones and Avantis Real 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 Real Estate are associated (or correlated) with SPDR Dow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Dow Jones has no effect on the direction of Avantis Real i.e., Avantis Real and SPDR Dow go up and down completely randomly.
Pair Corralation between Avantis Real and SPDR Dow
Given the investment horizon of 90 days Avantis Real is expected to generate 1.11 times less return on investment than SPDR Dow. But when comparing it to its historical volatility, Avantis Real Estate is 1.05 times less risky than SPDR Dow. It trades about 0.03 of its potential returns per unit of risk. SPDR Dow Jones is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 3,922 in SPDR Dow Jones on August 26, 2024 and sell it today you would earn a total of 660.00 from holding SPDR Dow Jones or generate 16.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Real Estate vs. SPDR Dow Jones
Performance |
| Timeline |
| Avantis Real Estate |
| SPDR Dow Jones |
Avantis Real and SPDR Dow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Real and SPDR Dow
The main advantage of trading using opposite Avantis Real and SPDR Dow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Real position performs unexpectedly, SPDR Dow 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 SPDR Dow will offset losses from the drop in SPDR Dow's long position.| Avantis Real vs. iShares International Treasury | Avantis Real vs. iShares 1 3 Year | Avantis Real vs. SPDR Dow Jones | Avantis Real vs. iShares MSCI Emerging |
| SPDR Dow vs. iShares International Treasury | SPDR Dow vs. iShares 1 3 Year | SPDR Dow vs. SPDR Dow Jones | SPDR Dow vs. iShares MSCI Emerging |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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