Correlation Between Vanguard Small and Avantis Real
Can any of the company-specific risk be diversified away by investing in both Vanguard Small and Avantis Real 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 Vanguard Small and Avantis Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Index and Avantis Real Estate, you can compare the effects of market volatilities on Vanguard Small and Avantis Real 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 Vanguard Small with a short position of Avantis Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small and Avantis Real.
Diversification Opportunities for Vanguard Small and Avantis Real
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vanguard and Avantis is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Index and Avantis Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Real Estate and Vanguard Small 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 Vanguard Small Cap Index are associated (or correlated) with Avantis Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Real Estate has no effect on the direction of Vanguard Small i.e., Vanguard Small and Avantis Real go up and down completely randomly.
Pair Corralation between Vanguard Small and Avantis Real
Allowing for the 90-day total investment horizon Vanguard Small Cap Index is expected to generate 1.15 times more return on investment than Avantis Real. However, Vanguard Small is 1.15 times more volatile than Avantis Real Estate. It trades about 0.06 of its potential returns per unit of risk. Avantis Real Estate is currently generating about 0.03 per unit of risk. If you would invest 18,523 in Vanguard Small Cap Index on August 26, 2024 and sell it today you would earn a total of 7,250 from holding Vanguard Small Cap Index or generate 39.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Index vs. Avantis Real Estate
Performance |
| Timeline |
| Vanguard Small Cap |
| Avantis Real Estate |
Vanguard Small and Avantis Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small and Avantis Real
The main advantage of trading using opposite Vanguard Small and Avantis Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small position performs unexpectedly, Avantis Real 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 Real will offset losses from the drop in Avantis Real's long position.| Vanguard Small vs. Vanguard Mid Cap Index | Vanguard Small vs. Vanguard Small Cap Value | Vanguard Small vs. Vanguard FTSE Emerging | Vanguard Small vs. Vanguard Large Cap Index |
| Avantis Real vs. iShares International Treasury | Avantis Real vs. iShares 1 3 Year | Avantis Real vs. SPDR Dow Jones | Avantis Real vs. iShares MSCI Emerging |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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