Correlation Between Avantis Small and Cambria Micro
Can any of the company-specific risk be diversified away by investing in both Avantis Small and Cambria Micro 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 Cambria Micro 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 Cambria Micro And, you can compare the effects of market volatilities on Avantis Small and Cambria Micro 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 Cambria Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Small and Cambria Micro.
Diversification Opportunities for Avantis Small and Cambria Micro
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Avantis and Cambria is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Small Cap and Cambria Micro And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambria Micro And 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 Cambria Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambria Micro And has no effect on the direction of Avantis Small i.e., Avantis Small and Cambria Micro go up and down completely randomly.
Pair Corralation between Avantis Small and Cambria Micro
Given the investment horizon of 90 days Avantis Small Cap is expected to generate 1.13 times more return on investment than Cambria Micro. However, Avantis Small is 1.13 times more volatile than Cambria Micro And. It trades about 0.08 of its potential returns per unit of risk. Cambria Micro And is currently generating about 0.06 per unit of risk. If you would invest 7,516 in Avantis Small Cap on August 31, 2024 and sell it today you would earn a total of 3,033 from holding Avantis Small Cap or generate 40.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 61.5% |
| Values | Daily Returns |
Avantis Small Cap vs. Cambria Micro And
Performance |
| Timeline |
| Avantis Small Cap |
| Cambria Micro And |
Avantis Small and Cambria Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Small and Cambria Micro
The main advantage of trading using opposite Avantis Small and Cambria Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Small position performs unexpectedly, Cambria Micro 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 Cambria Micro will offset losses from the drop in Cambria Micro's long position.| Avantis Small vs. Dimensional ETF Trust | Avantis Small vs. Vanguard Small Cap Index | Avantis Small vs. First Trust Multi Manager | Avantis Small vs. Vanguard SP Small Cap |
| Cambria Micro vs. Vanguard Small Cap Value | Cambria Micro vs. Dimensional Targeted Value | Cambria Micro vs. iShares SP Small Cap | Cambria Micro vs. SPDR SP 600 |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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