Correlation Between ETRACS Monthly and Avantis Equity
Can any of the company-specific risk be diversified away by investing in both ETRACS Monthly and Avantis Equity 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 ETRACS Monthly and Avantis Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETRACS Monthly Pay and Avantis Equity ETF, you can compare the effects of market volatilities on ETRACS Monthly and Avantis Equity 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 ETRACS Monthly with a short position of Avantis Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETRACS Monthly and Avantis Equity.
Diversification Opportunities for ETRACS Monthly and Avantis Equity
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ETRACS and Avantis is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ETRACS Monthly Pay and Avantis Equity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Equity ETF and ETRACS Monthly 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 ETRACS Monthly Pay are associated (or correlated) with Avantis Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Equity ETF has no effect on the direction of ETRACS Monthly i.e., ETRACS Monthly and Avantis Equity go up and down completely randomly.
Pair Corralation between ETRACS Monthly and Avantis Equity
Given the investment horizon of 90 days ETRACS Monthly is expected to generate 2.01 times less return on investment than Avantis Equity. In addition to that, ETRACS Monthly is 1.07 times more volatile than Avantis Equity ETF. It trades about 0.12 of its total potential returns per unit of risk. Avantis Equity ETF is currently generating about 0.25 per unit of volatility. If you would invest 9,611 in Avantis Equity ETF on August 31, 2024 and sell it today you would earn a total of 514.00 from holding Avantis Equity ETF or generate 5.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETRACS Monthly Pay vs. Avantis Equity ETF
Performance |
| Timeline |
| ETRACS Monthly Pay |
| Avantis Equity ETF |
ETRACS Monthly and Avantis Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETRACS Monthly and Avantis Equity
The main advantage of trading using opposite ETRACS Monthly and Avantis Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETRACS Monthly position performs unexpectedly, Avantis Equity 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 Equity will offset losses from the drop in Avantis Equity's long position.| ETRACS Monthly vs. ProShares VIX Mid Term | ETRACS Monthly vs. ProShares VIX Short Term | ETRACS Monthly vs. iPath Series B | ETRACS Monthly vs. ProShares Short VIX |
| Avantis Equity vs. Avantis International Equity | Avantis Equity vs. Avantis Emerging Markets | Avantis Equity vs. Avantis Small Cap | Avantis Equity vs. Avantis International Small |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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