Correlation Between Avantis Equity and Avantis Emerging
Can any of the company-specific risk be diversified away by investing in both Avantis Equity and Avantis Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Avantis Equity and Avantis Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Equity and Avantis Emerging.
Diversification Opportunities for Avantis Equity and Avantis Emerging
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Avantis and Avantis is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Equity ETF and Avantis Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Emerging Markets 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Emerging Markets has no effect on the direction of Avantis Equity i.e., Avantis Equity and Avantis Emerging go up and down completely randomly.
Pair Corralation between Avantis Equity and Avantis Emerging
Given the investment horizon of 90 days Avantis Equity ETF is expected to generate 0.81 times more return on investment than Avantis Emerging. However, Avantis Equity ETF is 1.24 times less risky than Avantis Emerging. It trades about 0.22 of its potential returns per unit of risk. Avantis Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 9,683 in Avantis Equity ETF on November 3, 2024 and sell it today you would earn a total of 347.00 from holding Avantis Equity ETF or generate 3.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Equity ETF vs. Avantis Emerging Markets
Performance |
| Timeline |
| Avantis Equity ETF |
| Avantis Emerging Markets |
Avantis Equity and Avantis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Equity and Avantis Emerging
The main advantage of trading using opposite Avantis Equity and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Equity position performs unexpectedly, Avantis Emerging 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 Emerging will offset losses from the drop in Avantis Emerging'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 Emerging vs. Avantis International Equity | Avantis Emerging vs. Avantis International Small | Avantis Emerging vs. Avantis Equity ETF | Avantis Emerging 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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