Correlation Between IShares Short and Avantis Core

Can any of the company-specific risk be diversified away by investing in both IShares Short and Avantis Core 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 IShares Short and Avantis Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Short Maturity and Avantis Core Municipal, you can compare the effects of market volatilities on IShares Short and Avantis Core 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 IShares Short with a short position of Avantis Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Short and Avantis Core.

Diversification Opportunities for IShares Short and Avantis Core

0.58

Correlation Coefficient

IShares Short  Avantis Core

Very weak diversification

The 3 months correlation between IShares and Avantis is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding iShares Short Maturity and Avantis Core Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Core Municipal and IShares Short 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 iShares Short Maturity are associated (or correlated) with Avantis Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Core Municipal has no effect on the direction of IShares Short i.e., IShares Short and Avantis Core go up and down completely randomly.

Pair Corralation between IShares Short and Avantis Core

Given the investment horizon of 90 days iShares Short Maturity is expected to generate 0.24 times more return on investment than Avantis Core. However, iShares Short Maturity is 4.08 times less risky than Avantis Core. It trades about 0.15 of its potential returns per unit of risk. Avantis Core Municipal is currently generating about 0.01 per unit of risk. If you would invest  4,985  in iShares Short Maturity on September 15, 2024 and sell it today you would earn a total of  31.00  from holding iShares Short Maturity or generate 0.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

iShares Short Maturity  vs.  Avantis Core Municipal

iShares Short Maturity

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Short Maturity are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, IShares Short is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Avantis Core Municipal

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis Core Municipal are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Avantis Core is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Short and Avantis Core

The main advantage of trading using opposite IShares Short and Avantis Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Short position performs unexpectedly, Avantis Core 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 Core will offset losses from the drop in Avantis Core's long position.

The idea behind iShares Short Maturity and Avantis Core Municipal 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.