Correlation Between American Funds and Avantis Us
Can any of the company-specific risk be diversified away by investing in both American Funds and Avantis Us 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 American Funds and Avantis Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds 2065 and Avantis Large Cap, you can compare the effects of market volatilities on American Funds and Avantis Us 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 American Funds with a short position of Avantis Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Avantis Us.
Diversification Opportunities for American Funds and Avantis Us
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Avantis is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding American Funds 2065 and Avantis Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Large Cap and American Funds 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 American Funds 2065 are associated (or correlated) with Avantis Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Large Cap has no effect on the direction of American Funds i.e., American Funds and Avantis Us go up and down completely randomly.
Pair Corralation between American Funds and Avantis Us
Assuming the 90 days horizon American Funds 2065 is expected to generate 1.02 times more return on investment than Avantis Us. However, American Funds is 1.02 times more volatile than Avantis Large Cap. It trades about -0.02 of its potential returns per unit of risk. Avantis Large Cap is currently generating about -0.04 per unit of risk. If you would invest 1,792 in American Funds 2065 on October 23, 2024 and sell it today you would lose (14.00) from holding American Funds 2065 or give up 0.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds 2065 vs. Avantis Large Cap
Performance |
| Timeline |
| American Funds 2065 |
| Avantis Large Cap |
American Funds and Avantis Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Avantis Us
The main advantage of trading using opposite American Funds and Avantis Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Avantis Us 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 Us will offset losses from the drop in Avantis Us' long position.| American Funds vs. Avantis Large Cap | American Funds vs. Tax Managed Large Cap | American Funds vs. M Large Cap | American Funds vs. Qs Large Cap |
| Avantis Us vs. Transamerica Funds | Avantis Us vs. Janus Investment | Avantis Us vs. Pace Select Advisors | Avantis Us vs. Jpmorgan Trust Iv |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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