Correlation Between Vanguard Developed and Avantis International
Can any of the company-specific risk be diversified away by investing in both Vanguard Developed 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 Vanguard Developed and Avantis International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Developed Markets and Avantis International Equity, you can compare the effects of market volatilities on Vanguard Developed 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 Vanguard Developed with a short position of Avantis International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Developed and Avantis International.
Diversification Opportunities for Vanguard Developed and Avantis International
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Vanguard and Avantis is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Developed Markets and Avantis International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis International and Vanguard Developed 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 Developed Markets 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 Vanguard Developed i.e., Vanguard Developed and Avantis International go up and down completely randomly.
Pair Corralation between Vanguard Developed and Avantis International
Assuming the 90 days horizon Vanguard Developed Markets is expected to under-perform the Avantis International. In addition to that, Vanguard Developed is 1.0 times more volatile than Avantis International Equity. It trades about -0.18 of its total potential returns per unit of risk. Avantis International Equity is currently generating about -0.14 per unit of volatility. If you would invest 1,254 in Avantis International Equity on August 27, 2024 and sell it today you would lose (27.00) from holding Avantis International Equity or give up 2.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Developed Markets vs. Avantis International Equity
Performance |
| Timeline |
| Vanguard Developed |
| Avantis International |
Vanguard Developed and Avantis International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Developed and Avantis International
The main advantage of trading using opposite Vanguard Developed and Avantis International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Developed 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.| Vanguard Developed vs. Auer Growth Fund | Vanguard Developed vs. Rational Special Situations | Vanguard Developed vs. Volumetric Fund Volumetric | Vanguard Developed vs. Ab Value Fund |
| Avantis International vs. Avantis International Small | Avantis International vs. American Century Etf | Avantis International vs. American Century Etf | Avantis International 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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