Correlation Between Vanguard and Avantis Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard 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 Vanguard and Avantis Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard SP Small Cap and Avantis Emerging Markets, you can compare the effects of market volatilities on Vanguard 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 Vanguard with a short position of Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard and Avantis Emerging.
Diversification Opportunities for Vanguard and Avantis Emerging
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vanguard and Avantis is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard SP Small Cap 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 Vanguard 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 SP Small Cap 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 Vanguard i.e., Vanguard and Avantis Emerging go up and down completely randomly.
Pair Corralation between Vanguard and Avantis Emerging
Given the investment horizon of 90 days Vanguard is expected to generate 47.98 times less return on investment than Avantis Emerging. But when comparing it to its historical volatility, Vanguard SP Small Cap is 60.43 times less risky than Avantis Emerging. It trades about 0.09 of its potential returns per unit of risk. Avantis Emerging Markets is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Avantis Emerging Markets on September 2, 2024 and sell it today you would earn a total of 5,133 from holding Avantis Emerging Markets or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 71.77% |
| Values | Daily Returns |
Vanguard SP Small Cap vs. Avantis Emerging Markets
Performance |
| Timeline |
| Vanguard SP Small |
| Avantis Emerging Markets |
Vanguard and Avantis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard and Avantis Emerging
The main advantage of trading using opposite Vanguard and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard 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.| Vanguard vs. Vanguard SP Small Cap | Vanguard vs. Vanguard SP Mid Cap | Vanguard vs. Vanguard Russell 2000 | Vanguard vs. Vanguard SP Small Cap |
| Avantis Emerging vs. Xtrackers MSCI Emerging | Avantis Emerging vs. FlexShares Morningstar Emerging | Avantis Emerging vs. First Trust 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 Global Correlations module to find global opportunities by holding instruments from different markets.
Other Complementary Tools
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Stocks Directory Find actively traded stocks across global markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk |