Correlation Between Dfa California and Dfa Selectively
Can any of the company-specific risk be diversified away by investing in both Dfa California and Dfa Selectively 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 California and Dfa Selectively into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa California Municipal and Dfa Selectively Hedged, you can compare the effects of market volatilities on Dfa California and Dfa Selectively 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 California with a short position of Dfa Selectively. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa California and Dfa Selectively.
Diversification Opportunities for Dfa California and Dfa Selectively
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dfa and Dfa is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dfa California Municipal and Dfa Selectively Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Selectively Hedged and Dfa California 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 California Municipal are associated (or correlated) with Dfa Selectively. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Selectively Hedged has no effect on the direction of Dfa California i.e., Dfa California and Dfa Selectively go up and down completely randomly.
Pair Corralation between Dfa California and Dfa Selectively
Assuming the 90 days horizon Dfa California Municipal is expected to generate 2.04 times more return on investment than Dfa Selectively. However, Dfa California is 2.04 times more volatile than Dfa Selectively Hedged. It trades about 0.33 of its potential returns per unit of risk. Dfa Selectively Hedged is currently generating about 0.39 per unit of risk. If you would invest 1,070 in Dfa California Municipal on January 6, 2025 and sell it today you would earn a total of 6.00 from holding Dfa California Municipal or generate 0.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa California Municipal vs. Dfa Selectively Hedged
Performance |
| Timeline |
| Dfa California Municipal |
| Dfa Selectively Hedged |
Dfa California and Dfa Selectively Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa California and Dfa Selectively
The main advantage of trading using opposite Dfa California and Dfa Selectively positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa California position performs unexpectedly, Dfa Selectively 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 Selectively will offset losses from the drop in Dfa Selectively's long position.| Dfa California vs. Gmo International Equity | Dfa California vs. Pace International Equity | Dfa California vs. Pnc International Equity | Dfa California vs. Touchstone International Equity |
| Dfa Selectively vs. Intal High Relative | Dfa Selectively vs. Dfa International | Dfa Selectively vs. Dfa Inflation Protected | Dfa Selectively vs. Dfa International Small |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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