Correlation Between NYSE Composite and Avantis All
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Avantis All 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 NYSE Composite and Avantis All into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Avantis All Equity, you can compare the effects of market volatilities on NYSE Composite and Avantis All 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 NYSE Composite with a short position of Avantis All. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Avantis All.
Diversification Opportunities for NYSE Composite and Avantis All
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NYSE and Avantis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Avantis All Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis All Equity and NYSE Composite 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 NYSE Composite are associated (or correlated) with Avantis All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis All Equity has no effect on the direction of NYSE Composite i.e., NYSE Composite and Avantis All go up and down completely randomly.
Pair Corralation between NYSE Composite and Avantis All
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.97 times more return on investment than Avantis All. However, NYSE Composite is 1.03 times less risky than Avantis All. It trades about -0.02 of its potential returns per unit of risk. Avantis All Equity is currently generating about -0.05 per unit of risk. If you would invest 1,998,000 in NYSE Composite on November 28, 2024 and sell it today you would lose (5,595) from holding NYSE Composite or give up 0.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Avantis All Equity
Performance |
| Timeline |
NYSE Composite and Avantis All Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Avantis All Equity
Pair trading matchups for Avantis All
Pair Trading with NYSE Composite and Avantis All
The main advantage of trading using opposite NYSE Composite and Avantis All positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Avantis All 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 All will offset losses from the drop in Avantis All's long position.| NYSE Composite vs. Inter Parfums | NYSE Composite vs. Amkor Technology | NYSE Composite vs. Unilever PLC ADR | NYSE Composite vs. Estee Lauder Companies |
| Avantis All vs. Avantis Small Cap | Avantis All vs. Avantis International Small | Avantis All vs. Avantis Equity ETF | Avantis All vs. Avantis Emerging Markets |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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