Correlation Between Dfa Emerging and Commodities Strategy
Can any of the company-specific risk be diversified away by investing in both Dfa Emerging and Commodities Strategy 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 Commodities Strategy 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 Commodities Strategy Fund, you can compare the effects of market volatilities on Dfa Emerging and Commodities Strategy 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 Commodities Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Emerging and Commodities Strategy.
Diversification Opportunities for Dfa Emerging and Commodities Strategy
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dfa and Commodities is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Emerging Markets and Commodities Strategy Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commodities Strategy 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 Commodities Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commodities Strategy has no effect on the direction of Dfa Emerging i.e., Dfa Emerging and Commodities Strategy go up and down completely randomly.
Pair Corralation between Dfa Emerging and Commodities Strategy
Assuming the 90 days horizon Dfa Emerging Markets is expected to generate 0.66 times more return on investment than Commodities Strategy. However, Dfa Emerging Markets is 1.52 times less risky than Commodities Strategy. It trades about 0.06 of its potential returns per unit of risk. Commodities Strategy Fund is currently generating about 0.01 per unit of risk. If you would invest 1,200 in Dfa Emerging Markets on September 5, 2024 and sell it today you would earn a total of 306.00 from holding Dfa Emerging Markets or generate 25.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Emerging Markets vs. Commodities Strategy Fund
Performance |
| Timeline |
| Dfa Emerging Markets |
| Commodities Strategy |
Dfa Emerging and Commodities Strategy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Emerging and Commodities Strategy
The main advantage of trading using opposite Dfa Emerging and Commodities Strategy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Emerging position performs unexpectedly, Commodities Strategy 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 Commodities Strategy will offset losses from the drop in Commodities Strategy's long position.| Dfa Emerging vs. Commodities Strategy Fund | Dfa Emerging vs. Balanced Fund Investor | Dfa Emerging vs. Volumetric Fund Volumetric | Dfa Emerging vs. Artisan Thematic Fund |
| Commodities Strategy vs. Basic Materials Fund | Commodities Strategy vs. Energy Services Fund | Commodities Strategy vs. Energy Fund Investor | Commodities Strategy vs. Real Estate Fund |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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