Correlation Between Emerging Markets and Dfa Emerging
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Dfa 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 Emerging Markets and Dfa Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Targeted and Dfa Emerging Markets, you can compare the effects of market volatilities on Emerging Markets and Dfa 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 Emerging Markets with a short position of Dfa Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Dfa Emerging.
Diversification Opportunities for Emerging Markets and Dfa Emerging
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Emerging and Dfa is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Targeted and Dfa Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Emerging Markets and Emerging Markets 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 Emerging Markets Targeted are associated (or correlated) with Dfa Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Emerging Markets has no effect on the direction of Emerging Markets i.e., Emerging Markets and Dfa Emerging go up and down completely randomly.
Pair Corralation between Emerging Markets and Dfa Emerging
Assuming the 90 days horizon Emerging Markets Targeted is expected to generate 1.0 times more return on investment than Dfa Emerging. However, Emerging Markets Targeted is 1.0 times less risky than Dfa Emerging. It trades about -0.15 of its potential returns per unit of risk. Dfa Emerging Markets is currently generating about -0.18 per unit of risk. If you would invest 1,198 in Emerging Markets Targeted on August 27, 2024 and sell it today you would lose (31.00) from holding Emerging Markets Targeted or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Emerging Markets Targeted vs. Dfa Emerging Markets
Performance |
| Timeline |
| Emerging Markets Targeted |
| Dfa Emerging Markets |
Emerging Markets and Dfa Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Dfa Emerging
The main advantage of trading using opposite Emerging Markets and Dfa Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Dfa 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 Dfa Emerging will offset losses from the drop in Dfa Emerging's long position.| Emerging Markets vs. Intal High Relative | Emerging Markets vs. Dfa International | Emerging Markets vs. Dfa Inflation Protected | Emerging Markets vs. Dfa International Small |
| Dfa Emerging vs. International E Equity | Dfa Emerging vs. Dfa International Small | Dfa Emerging vs. Us E Equity | Dfa Emerging vs. Us Large Cap |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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