Correlation Between IShares MSCI and Avantis All
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Avantis All 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 IShares MSCI and Avantis All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI ACWI and Avantis All Equity, you can compare the effects of market volatilities on IShares MSCI and Avantis All 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 IShares MSCI with a short position of Avantis All. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Avantis All.
Diversification Opportunities for IShares MSCI and Avantis All
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Avantis is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI ACWI and Avantis All Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis All Equity and IShares MSCI 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 iShares MSCI ACWI are associated (or correlated) with Avantis All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis All Equity has no effect on the direction of IShares MSCI i.e., IShares MSCI and Avantis All go up and down completely randomly.
Pair Corralation between IShares MSCI and Avantis All
Given the investment horizon of 90 days IShares MSCI is expected to generate 1.3 times less return on investment than Avantis All. But when comparing it to its historical volatility, iShares MSCI ACWI is 1.26 times less risky than Avantis All. It trades about 0.33 of its potential returns per unit of risk. Avantis All Equity is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 7,268 in Avantis All Equity on September 3, 2024 and sell it today you would earn a total of 388.00 from holding Avantis All Equity or generate 5.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI ACWI vs. Avantis All Equity
Performance |
| Timeline |
| iShares MSCI ACWI |
| Avantis All Equity |
IShares MSCI and Avantis All Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Avantis All
The main advantage of trading using opposite IShares MSCI and Avantis All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Avantis All 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 All will offset losses from the drop in Avantis All's long position.| IShares MSCI vs. SmartETFs Asia Pacific | IShares MSCI vs. Listed Funds Trust | IShares MSCI vs. iShares AsiaPacific Dividend | IShares MSCI vs. ProShares MSCI Emerging |
| Avantis All vs. Avantis Small Cap | Avantis All vs. Avantis International Small | Avantis All vs. Avantis Equity ETF | Avantis All vs. Avantis Emerging Markets |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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