Correlation Between Avantis Emerging and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Avantis Emerging and Dow Jones 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 Emerging and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis Emerging Markets and Dow Jones Industrial, you can compare the effects of market volatilities on Avantis Emerging and Dow Jones 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 Emerging with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Emerging and Dow Jones.
Diversification Opportunities for Avantis Emerging and Dow Jones
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Avantis and Dow is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Emerging Markets and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Avantis Emerging 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 Emerging Markets are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Avantis Emerging i.e., Avantis Emerging and Dow Jones go up and down completely randomly.
Pair Corralation between Avantis Emerging and Dow Jones
Given the investment horizon of 90 days Avantis Emerging Markets is expected to generate 111.56 times more return on investment than Dow Jones. However, Avantis Emerging is 111.56 times more volatile than Dow Jones Industrial. It trades about 0.08 of its potential returns per unit of risk. Dow Jones Industrial is currently generating about 0.12 per unit of risk. If you would invest 0.00 in Avantis Emerging Markets on August 31, 2024 and sell it today you would earn a total of 5,133 from holding Avantis Emerging Markets or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.33% |
| Values | Daily Returns |
Avantis Emerging Markets vs. Dow Jones Industrial
Performance |
| Timeline |
Avantis Emerging and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Avantis Emerging Markets
Pair trading matchups for Avantis Emerging
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Avantis Emerging and Dow Jones
The main advantage of trading using opposite Avantis Emerging and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Emerging position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Avantis Emerging vs. Dimensional ETF Trust | Avantis Emerging vs. Vanguard Small Cap Index | Avantis Emerging vs. First Trust Multi Manager | Avantis Emerging vs. Vanguard SP Small Cap |
| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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