Correlation Between Dimensional ETF and Avantis Emerging
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and Avantis Emerging 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 Dimensional ETF and Avantis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional ETF Trust and Avantis Emerging Markets, you can compare the effects of market volatilities on Dimensional ETF and Avantis Emerging 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 Dimensional ETF with a short position of Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and Avantis Emerging.
Diversification Opportunities for Dimensional ETF and Avantis Emerging
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and Avantis is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Avantis Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Emerging Markets and Dimensional ETF 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 Dimensional ETF Trust are associated (or correlated) with Avantis Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Emerging Markets has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Avantis Emerging go up and down completely randomly.
Pair Corralation between Dimensional ETF and Avantis Emerging
Given the investment horizon of 90 days Dimensional ETF is expected to generate 99.0 times less return on investment than Avantis Emerging. But when comparing it to its historical volatility, Dimensional ETF Trust is 82.15 times less risky than Avantis Emerging. It trades about 0.06 of its potential returns per unit of risk. Avantis Emerging Markets is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Avantis Emerging Markets on September 2, 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 Together |
| Strength | Very Strong |
| Accuracy | 71.77% |
| Values | Daily Returns |
Dimensional ETF Trust vs. Avantis Emerging Markets
Performance |
| Timeline |
| Dimensional ETF Trust |
| Avantis Emerging Markets |
Dimensional ETF and Avantis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and Avantis Emerging
The main advantage of trading using opposite Dimensional ETF and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, Avantis Emerging 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 Emerging will offset losses from the drop in Avantis Emerging's long position.| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional International Value | Dimensional ETF vs. Dimensional Targeted Value |
| Avantis Emerging vs. Xtrackers MSCI Emerging | Avantis Emerging vs. FlexShares Morningstar Emerging | Avantis Emerging vs. First Trust Emerging |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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