Correlation Between FT Vest and Avantis Small
Can any of the company-specific risk be diversified away by investing in both FT Vest and Avantis Small 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 FT Vest and Avantis Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Vest Equity and Avantis Small Cap, you can compare the effects of market volatilities on FT Vest and Avantis Small 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 FT Vest with a short position of Avantis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and Avantis Small.
Diversification Opportunities for FT Vest and Avantis Small
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between DHDG and Avantis is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and Avantis Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Small Cap and FT Vest 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 FT Vest Equity are associated (or correlated) with Avantis Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Small Cap has no effect on the direction of FT Vest i.e., FT Vest and Avantis Small go up and down completely randomly.
Pair Corralation between FT Vest and Avantis Small
Given the investment horizon of 90 days FT Vest is expected to generate 3.41 times less return on investment than Avantis Small. But when comparing it to its historical volatility, FT Vest Equity is 5.01 times less risky than Avantis Small. It trades about 0.41 of its potential returns per unit of risk. Avantis Small Cap is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 9,498 in Avantis Small Cap on September 3, 2024 and sell it today you would earn a total of 1,051 from holding Avantis Small Cap or generate 11.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
FT Vest Equity vs. Avantis Small Cap
Performance |
| Timeline |
| FT Vest Equity |
| Avantis Small Cap |
FT Vest and Avantis Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Vest and Avantis Small
The main advantage of trading using opposite FT Vest and Avantis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest position performs unexpectedly, Avantis Small 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 Small will offset losses from the drop in Avantis Small's long position.| FT Vest vs. Vanguard Total Stock | FT Vest vs. SPDR SP 500 | FT Vest vs. Vanguard Total Bond | FT Vest vs. Vanguard Value Index |
| Avantis Small vs. FT Vest Equity | Avantis Small vs. Northern Lights | Avantis Small vs. Dimensional International High | Avantis Small vs. JPMorgan Fundamental Data |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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