Correlation Between MicroSectors FANG and Avantis Emerging

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

By analyzing existing cross correlation between MicroSectors FANG Index and Avantis Emerging Markets, you can compare the effects of market volatilities on MicroSectors FANG 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 MicroSectors FANG with a short position of Avantis Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of MicroSectors FANG and Avantis Emerging.

Diversification Opportunities for MicroSectors FANG and Avantis Emerging

-0.67

Correlation Coefficient

MicroSectors FANG  Avantis Emerging

Excellent diversification

The 3 months correlation between MicroSectors and Avantis is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding MicroSectors FANG Index 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 MicroSectors FANG 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 MicroSectors FANG Index 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 MicroSectors FANG i.e., MicroSectors FANG and Avantis Emerging go up and down completely randomly.

Pair Corralation between MicroSectors FANG and Avantis Emerging

If you would invest  5,011  in Avantis Emerging Markets on May 21, 2025 and sell it today you would earn a total of  613.00  from holding Avantis Emerging Markets or generate 12.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.64%
Values	Daily Returns

MicroSectors FANG Index  vs.  Avantis Emerging Markets

MicroSectors FANG Index

Risk-Adjusted Performance

Weakest

Over the last 90 days MicroSectors FANG Index has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, MicroSectors FANG is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Avantis Emerging Markets

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Avantis Emerging Markets are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal technical and fundamental indicators, Avantis Emerging may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with MicroSectors FANG and Avantis Emerging

The main advantage of trading using opposite MicroSectors FANG and Avantis Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MicroSectors FANG 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.

The idea behind MicroSectors FANG Index and Avantis Emerging Markets 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.