Correlation Between TSJA and Avantis Small
Can any of the company-specific risk be diversified away by investing in both TSJA and Avantis Small 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 TSJA and Avantis Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TSJA and Avantis Small Cap, you can compare the effects of market volatilities on TSJA and Avantis Small 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 TSJA with a short position of Avantis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of TSJA and Avantis Small.
Diversification Opportunities for TSJA and Avantis Small
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between TSJA and Avantis is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding TSJA and Avantis Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Small Cap and TSJA 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 TSJA are associated (or correlated) with Avantis Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Small Cap has no effect on the direction of TSJA i.e., TSJA and Avantis Small go up and down completely randomly.
Pair Corralation between TSJA and Avantis Small
If you would invest 8,144 in Avantis Small Cap on August 27, 2024 and sell it today you would earn a total of 2,334 from holding Avantis Small Cap or generate 28.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 0.4% |
| Values | Daily Returns |
TSJA vs. Avantis Small Cap
Performance |
| Timeline |
| TSJA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Avantis Small Cap |
TSJA and Avantis Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with TSJA and Avantis Small
The main advantage of trading using opposite TSJA and Avantis Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TSJA position performs unexpectedly, Avantis Small 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 Small will offset losses from the drop in Avantis Small's long position.The idea behind TSJA and Avantis Small Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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