Correlation Between Avantis Equity and Avantis International
Can any of the company-specific risk be diversified away by investing in both Avantis Equity and Avantis International 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 Equity and Avantis International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis Equity and Avantis International Small, you can compare the effects of market volatilities on Avantis Equity and Avantis International 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 Equity with a short position of Avantis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Equity and Avantis International.
Diversification Opportunities for Avantis Equity and Avantis International
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avantis and Avantis is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Equity and Avantis International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International and Avantis Equity 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 Equity are associated (or correlated) with Avantis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis International has no effect on the direction of Avantis Equity i.e., Avantis Equity and Avantis International go up and down completely randomly.
Pair Corralation between Avantis Equity and Avantis International
Assuming the 90 days horizon Avantis Equity is expected to generate 0.91 times more return on investment than Avantis International. However, Avantis Equity is 1.1 times less risky than Avantis International. It trades about 0.14 of its potential returns per unit of risk. Avantis International Small is currently generating about 0.07 per unit of risk. If you would invest 1,481 in Avantis Equity on September 2, 2024 and sell it today you would earn a total of 478.00 from holding Avantis Equity or generate 32.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Equity vs. Avantis International Small
Performance |
| Timeline |
| Avantis Equity |
| Avantis International |
Avantis Equity and Avantis International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Equity and Avantis International
The main advantage of trading using opposite Avantis Equity and Avantis International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Equity position performs unexpectedly, Avantis International 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 International will offset losses from the drop in Avantis International's long position.| Avantis Equity vs. Avantis International Small | Avantis Equity vs. American Century Etf | Avantis Equity vs. Avantis International Equity | Avantis Equity vs. American Century Etf |
| Avantis International vs. Avantis International Small | Avantis International vs. American Century Etf | Avantis International vs. American Century Etf | Avantis International vs. Avantis Emerging Markets |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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