Correlation Between IShares International and Avantis Emerging
Can any of the company-specific risk be diversified away by investing in both IShares International 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 IShares International and Avantis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares International Developed and Avantis Emerging Markets, you can compare the effects of market volatilities on IShares International 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 IShares International with a short position of Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares International and Avantis Emerging.
Diversification Opportunities for IShares International and Avantis Emerging
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between IShares and Avantis is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding iShares International Develope 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 IShares International 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 International Developed 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 IShares International i.e., IShares International and Avantis Emerging go up and down completely randomly.
Pair Corralation between IShares International and Avantis Emerging
Given the investment horizon of 90 days iShares International Developed is expected to under-perform the Avantis Emerging. In addition to that, IShares International is 1.01 times more volatile than Avantis Emerging Markets. It trades about -0.11 of its total potential returns per unit of risk. Avantis Emerging Markets is currently generating about 0.18 per unit of volatility. If you would invest 4,838 in Avantis Emerging Markets on September 14, 2024 and sell it today you would earn a total of 108.00 from holding Avantis Emerging Markets or generate 2.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares International Develope vs. Avantis Emerging Markets
Performance |
| Timeline |
| iShares International |
| Avantis Emerging Markets |
IShares International and Avantis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares International and Avantis Emerging
The main advantage of trading using opposite IShares International and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares International 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.| IShares International vs. iShares International Treasury | IShares International vs. iShares 1 3 Year | IShares International vs. SPDR Dow Jones | IShares International vs. iShares MSCI Emerging |
| Avantis Emerging vs. Avantis International Small | Avantis Emerging vs. Avantis Small Cap | Avantis Emerging vs. Avantis Emerging Markets | Avantis Emerging vs. American Century ETF |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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