Correlation Between Avantis Small and ETF Series
Can any of the company-specific risk be diversified away by investing in both Avantis Small and ETF Series 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 ETF Series 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 ETF Series Solutions, you can compare the effects of market volatilities on Avantis Small and ETF Series 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 ETF Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Small and ETF Series.
Diversification Opportunities for Avantis Small and ETF Series
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Avantis and ETF is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Small Cap and ETF Series Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETF Series Solutions 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 ETF Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETF Series Solutions has no effect on the direction of Avantis Small i.e., Avantis Small and ETF Series go up and down completely randomly.
Pair Corralation between Avantis Small and ETF Series
Given the investment horizon of 90 days Avantis Small Cap is expected to generate 1.52 times more return on investment than ETF Series. However, Avantis Small is 1.52 times more volatile than ETF Series Solutions. It trades about 0.09 of its potential returns per unit of risk. ETF Series Solutions is currently generating about 0.11 per unit of risk. If you would invest 6,929 in Avantis Small Cap on August 30, 2024 and sell it today you would earn a total of 3,599 from holding Avantis Small Cap or generate 51.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Small Cap vs. ETF Series Solutions
Performance |
| Timeline |
| Avantis Small Cap |
| ETF Series Solutions |
Avantis Small and ETF Series Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Small and ETF Series
The main advantage of trading using opposite Avantis Small and ETF Series positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Small position performs unexpectedly, ETF Series 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 ETF Series will offset losses from the drop in ETF Series' 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 |
| ETF Series vs. AAM Low Duration | ETF Series vs. 6 Meridian Low | ETF Series vs. Exchange Listed Funds | ETF Series vs. 6 Meridian Mega |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance |