Correlation Between Dfa Short-term and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Dfa Short-term and Emerging Markets 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 Short-term and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa Short Term Government and Emerging Markets Small, you can compare the effects of market volatilities on Dfa Short-term and Emerging Markets 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 Short-term with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Short-term and Emerging Markets.
Diversification Opportunities for Dfa Short-term and Emerging Markets
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dfa and Emerging is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Short Term Government and Emerging Markets Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Small and Dfa Short-term 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 Short Term Government are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Small has no effect on the direction of Dfa Short-term i.e., Dfa Short-term and Emerging Markets go up and down completely randomly.
Pair Corralation between Dfa Short-term and Emerging Markets
Assuming the 90 days horizon Dfa Short Term Government is expected to generate 0.05 times more return on investment than Emerging Markets. However, Dfa Short Term Government is 18.31 times less risky than Emerging Markets. It trades about 0.47 of its potential returns per unit of risk. Emerging Markets Small is currently generating about -0.02 per unit of risk. If you would invest 977.00 in Dfa Short Term Government on November 2, 2024 and sell it today you would earn a total of 19.00 from holding Dfa Short Term Government or generate 1.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Short Term Government vs. Emerging Markets Small
Performance |
| Timeline |
| Dfa Short Term |
| Emerging Markets Small |
Dfa Short-term and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Short-term and Emerging Markets
The main advantage of trading using opposite Dfa Short-term and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Short-term position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Dfa Short-term vs. Intal High Relative | Dfa Short-term vs. Dfa International | Dfa Short-term vs. Dfa Inflation Protected | Dfa Short-term vs. Dfa International Small |
| Emerging Markets vs. World Core Equity | Emerging Markets vs. Dfa International | Emerging Markets vs. Dimensional 2045 Target | Emerging Markets vs. Dimensional 2040 Target |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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