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 ETF and Avantis International Equity, 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
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Avantis and Avantis is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Equity ETF and Avantis International Equity 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 ETF 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
Given the investment horizon of 90 days Avantis Equity is expected to generate 1.03 times less return on investment than Avantis International. In addition to that, Avantis Equity is 1.17 times more volatile than Avantis International Equity. It trades about 0.19 of its total potential returns per unit of risk. Avantis International Equity is currently generating about 0.23 per unit of volatility. If you would invest 6,120 in Avantis International Equity on October 24, 2024 and sell it today you would earn a total of 196.00 from holding Avantis International Equity or generate 3.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Avantis Equity ETF vs. Avantis International Equity
Performance |
| Timeline |
| Avantis Equity ETF |
| 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 Equity | Avantis Equity vs. Avantis Emerging Markets | Avantis Equity vs. Avantis Small Cap | Avantis Equity vs. Avantis International Small |
| Avantis International vs. Avantis Emerging Markets | Avantis International vs. Avantis Equity ETF | Avantis International vs. Avantis International Small | Avantis International vs. Avantis 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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