Correlation Between Emerging Markets and Dfa Intl
Can any of the company-specific risk be diversified away by investing in both Emerging Markets and Dfa Intl 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 Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Emerging Markets Sustainability and Dfa Intl Sustainability, you can compare the effects of market volatilities on Emerging Markets and Dfa Intl 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 Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Dfa Intl.
Diversification Opportunities for Emerging Markets and Dfa Intl
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Emerging and Dfa is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets Sustainabilit and Dfa Intl Sustainability in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Intl Sustainability 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 Sustainability are associated (or correlated) with Dfa Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Intl Sustainability has no effect on the direction of Emerging Markets i.e., Emerging Markets and Dfa Intl go up and down completely randomly.
Pair Corralation between Emerging Markets and Dfa Intl
Assuming the 90 days horizon Emerging Markets Sustainability is expected to under-perform the Dfa Intl. In addition to that, Emerging Markets is 1.05 times more volatile than Dfa Intl Sustainability. It trades about -0.1 of its total potential returns per unit of risk. Dfa Intl Sustainability is currently generating about -0.1 per unit of volatility. If you would invest 1,342 in Dfa Intl Sustainability on September 13, 2024 and sell it today you would lose (42.00) from holding Dfa Intl Sustainability or give up 3.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Emerging Markets Sustainabilit vs. Dfa Intl Sustainability
Performance |
| Timeline |
| Emerging Markets Sus |
| Dfa Intl Sustainability |
Emerging Markets and Dfa Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Emerging Markets and Dfa Intl
The main advantage of trading using opposite Emerging Markets and Dfa Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerging Markets position performs unexpectedly, Dfa Intl 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 Intl will offset losses from the drop in Dfa Intl's long position.| Emerging Markets vs. Dfa Intl Sustainability | Emerging Markets vs. Dfa Sustainability Core | Emerging Markets vs. Dfa Investment Dimensions | Emerging Markets vs. Dfa Sustainability Targeted |
| Dfa Intl vs. Dfa International | Dfa Intl vs. Dfa Inflation Protected | Dfa Intl vs. Dfa International Small | Dfa Intl vs. Dfa International |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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