Correlation Between Avantis Small and Avantis Emerging
Can any of the company-specific risk be diversified away by investing in both Avantis Small 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 Small 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 Small Cap and Avantis Emerging Markets, you can compare the effects of market volatilities on Avantis Small 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 Small with a short position of Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Small and Avantis Emerging.
Diversification Opportunities for Avantis Small and Avantis Emerging
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Avantis and Avantis is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Small Cap 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 Small 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 Small Cap 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 Small i.e., Avantis Small and Avantis Emerging go up and down completely randomly.
Pair Corralation between Avantis Small and Avantis Emerging
Given the investment horizon of 90 days Avantis Small Cap is expected to generate 1.13 times more return on investment than Avantis Emerging. However, Avantis Small is 1.13 times more volatile than Avantis Emerging Markets. It trades about 0.11 of its potential returns per unit of risk. Avantis Emerging Markets is currently generating about -0.01 per unit of risk. If you would invest 9,638 in Avantis Small Cap on November 3, 2024 and sell it today you would earn a total of 193.00 from holding Avantis Small Cap or generate 2.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Small Cap vs. Avantis Emerging Markets
Performance |
| Timeline |
| Avantis Small Cap |
| Avantis Emerging Markets |
Avantis Small and Avantis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Small and Avantis Emerging
The main advantage of trading using opposite Avantis Small and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Small 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 Small vs. JPMorgan Fundamental Data | Avantis Small vs. Davis Select International | Avantis Small vs. Dimensional ETF Trust | Avantis Small vs. Principal Value ETF |
| Avantis Emerging vs. Avantis International Small | Avantis Emerging vs. Avantis Small Cap | Avantis Emerging vs. Avantis Emerging Markets | Avantis Emerging vs. American Century ETF |
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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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