Correlation Between Dfa Emerging and Dfa Calfrna

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Can any of the company-specific risk be diversified away by investing in both Dfa Emerging and Dfa Calfrna 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 Dfa Emerging and Dfa Calfrna into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa Emerging Markets and Dfa Calfrna Shrt, you can compare the effects of market volatilities on Dfa Emerging and Dfa Calfrna 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 Dfa Emerging with a short position of Dfa Calfrna. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Emerging and Dfa Calfrna.

Diversification Opportunities for Dfa Emerging and Dfa Calfrna

-0.69
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Dfa and Dfa is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Emerging Markets and Dfa Calfrna Shrt in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Calfrna Shrt and Dfa Emerging 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 Dfa Emerging Markets are associated (or correlated) with Dfa Calfrna. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Calfrna Shrt has no effect on the direction of Dfa Emerging i.e., Dfa Emerging and Dfa Calfrna go up and down completely randomly.

Pair Corralation between Dfa Emerging and Dfa Calfrna

Assuming the 90 days horizon Dfa Emerging Markets is expected to generate 13.24 times more return on investment than Dfa Calfrna. However, Dfa Emerging is 13.24 times more volatile than Dfa Calfrna Shrt. It trades about 0.06 of its potential returns per unit of risk. Dfa Calfrna Shrt is currently generating about 0.21 per unit of risk. If you would invest  904.00  in Dfa Emerging Markets on September 12, 2024 and sell it today you would earn a total of  134.00  from holding Dfa Emerging Markets or generate 14.82% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Dfa Emerging Markets  vs.  Dfa Calfrna Shrt

 Performance 
       Timeline  
Dfa Emerging Markets 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dfa Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Dfa Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Dfa Calfrna Shrt 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Calfrna Shrt are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong primary indicators, Dfa Calfrna is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dfa Emerging and Dfa Calfrna Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dfa Emerging and Dfa Calfrna

The main advantage of trading using opposite Dfa Emerging and Dfa Calfrna positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Emerging position performs unexpectedly, Dfa Calfrna 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 Dfa Calfrna will offset losses from the drop in Dfa Calfrna's long position.
The idea behind Dfa Emerging Markets and Dfa Calfrna Shrt 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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