Correlation Between Avantis Small and FT Vest
Can any of the company-specific risk be diversified away by investing in both Avantis Small and FT Vest 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 FT Vest 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 FT Vest Equity, you can compare the effects of market volatilities on Avantis Small and FT Vest 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 FT Vest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Small and FT Vest.
Diversification Opportunities for Avantis Small and FT Vest
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Avantis and DHDG is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Small Cap and FT Vest Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FT Vest Equity 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 FT Vest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FT Vest Equity has no effect on the direction of Avantis Small i.e., Avantis Small and FT Vest go up and down completely randomly.
Pair Corralation between Avantis Small and FT Vest
Given the investment horizon of 90 days Avantis Small Cap is expected to generate 1.31 times more return on investment than FT Vest. However, Avantis Small is 1.31 times more volatile than FT Vest Equity. It trades about 0.19 of its potential returns per unit of risk. FT Vest Equity is currently generating about 0.17 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 323.00 from holding Avantis Small Cap or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Avantis Small Cap vs. FT Vest Equity
Performance |
| Timeline |
| Avantis Small Cap |
| FT Vest Equity |
Avantis Small and FT Vest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Small and FT Vest
The main advantage of trading using opposite Avantis Small and FT Vest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Small position performs unexpectedly, FT Vest 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 FT Vest will offset losses from the drop in FT Vest'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 |
| FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. First Trust Exchange Traded | FT Vest vs. EA Series Trust |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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