Correlation Between Capitol Series and Avantis Small

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

By analyzing existing cross correlation between Capitol Series Trust and Avantis Small Cap, you can compare the effects of market volatilities on Capitol Series and Avantis Small 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 Capitol Series with a short position of Avantis Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capitol Series and Avantis Small.

Diversification Opportunities for Capitol Series and Avantis Small

0.84

Correlation Coefficient

Capitol Series  Avantis Small

Very poor diversification

The 3 months correlation between Capitol and Avantis is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Capitol Series Trust and Avantis Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avantis Small Cap and Capitol Series 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 Capitol Series Trust are associated (or correlated) with Avantis Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avantis Small Cap has no effect on the direction of Capitol Series i.e., Capitol Series and Avantis Small go up and down completely randomly.

Pair Corralation between Capitol Series and Avantis Small

Given the investment horizon of 90 days Capitol Series Trust is expected to under-perform the Avantis Small. But the etf apears to be less risky and, when comparing its historical volatility, Capitol Series Trust is 1.78 times less risky than Avantis Small. The etf trades about -0.06 of its potential returns per unit of risk. The Avantis Small Cap is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  8,840  in Avantis Small Cap on January 17, 2024 and sell it today you would lose (23.00) from holding Avantis Small Cap or give up 0.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Capitol Series Trust  vs.  Avantis Small Cap

Capitol Series Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Capitol Series Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Capitol Series may actually be approaching a critical reversion point that can send shares even higher in May 2024.

Avantis Small Cap

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis Small Cap are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Avantis Small is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Capitol Series and Avantis Small

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

The idea behind Capitol Series Trust and Avantis Small Cap 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.