Correlation Between MicroSectors FANG and Avantis International
Can any of the company-specific risk be diversified away by investing in both MicroSectors FANG and Avantis International 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 MicroSectors FANG and Avantis International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MicroSectors FANG ETN and Avantis International Small, you can compare the effects of market volatilities on MicroSectors FANG and Avantis International 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 MicroSectors FANG with a short position of Avantis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Avantis International.
Diversification Opportunities for MicroSectors FANG and Avantis International
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MicroSectors and Avantis is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG ETN and Avantis International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International and MicroSectors FANG 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 MicroSectors FANG ETN are associated (or correlated) with Avantis International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis International has no effect on the direction of MicroSectors FANG i.e., MicroSectors FANG and Avantis International go up and down completely randomly.
Pair Corralation between MicroSectors FANG and Avantis International
Given the investment horizon of 90 days MicroSectors FANG ETN is expected to generate 1.88 times more return on investment than Avantis International. However, MicroSectors FANG is 1.88 times more volatile than Avantis International Small. It trades about 0.08 of its potential returns per unit of risk. Avantis International Small is currently generating about 0.05 per unit of risk. If you would invest 5,191 in MicroSectors FANG ETN on August 31, 2024 and sell it today you would earn a total of 130.00 from holding MicroSectors FANG ETN or generate 2.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
MicroSectors FANG ETN vs. Avantis International Small
Performance |
| Timeline |
| MicroSectors FANG ETN |
| Avantis International |
MicroSectors FANG and Avantis International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MicroSectors FANG and Avantis International
The main advantage of trading using opposite MicroSectors FANG and Avantis International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG position performs unexpectedly, Avantis International 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 International will offset losses from the drop in Avantis International's long position.| MicroSectors FANG vs. Freedom Day Dividend | MicroSectors FANG vs. iShares MSCI China | MicroSectors FANG vs. iShares Dividend and | MicroSectors FANG vs. SmartETFs Dividend Builder |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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