Correlation Between Vanguard FTSE and Avantis Emerging
Can any of the company-specific risk be diversified away by investing in both Vanguard FTSE 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 FTSE 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 FTSE Emerging and Avantis Emerging Markets, you can compare the effects of market volatilities on Vanguard FTSE 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 FTSE with a short position of Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard FTSE and Avantis Emerging.
Diversification Opportunities for Vanguard FTSE and Avantis Emerging
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Avantis is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard FTSE Emerging 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 FTSE 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 FTSE Emerging 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 FTSE i.e., Vanguard FTSE and Avantis Emerging go up and down completely randomly.
Pair Corralation between Vanguard FTSE and Avantis Emerging
Considering the 90-day investment horizon Vanguard FTSE Emerging is expected to under-perform the Avantis Emerging. But the etf apears to be less risky and, when comparing its historical volatility, Vanguard FTSE Emerging is 1.1 times less risky than Avantis Emerging. The etf trades about -0.13 of its potential returns per unit of risk. The Avantis Emerging Markets is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 5,009 in Avantis Emerging Markets on August 31, 2024 and sell it today you would lose (123.00) from holding Avantis Emerging Markets or give up 2.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard FTSE Emerging vs. Avantis Emerging Markets
Performance |
| Timeline |
| Vanguard FTSE Emerging |
| Avantis Emerging Markets |
Vanguard FTSE and Avantis Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard FTSE and Avantis Emerging
The main advantage of trading using opposite Vanguard FTSE and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard FTSE 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 FTSE vs. Vanguard FTSE Developed | Vanguard FTSE vs. Vanguard Real Estate | Vanguard FTSE vs. Vanguard Small Cap Index | Vanguard FTSE vs. Vanguard Total Stock |
| Avantis Emerging vs. Avantis International Small | Avantis Emerging vs. Avantis Small Cap | Avantis Emerging vs. Avantis Emerging Markets | Avantis Emerging vs. American Century ETF |
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 Stocks Directory module to find actively traded stocks across global markets.
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