Correlation Between Dfa Global and International Core
Can any of the company-specific risk be diversified away by investing in both Dfa Global and International Core 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 Global and International Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa Global Real and International E Equity, you can compare the effects of market volatilities on Dfa Global and International Core 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 Global with a short position of International Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Global and International Core.
Diversification Opportunities for Dfa Global and International Core
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dfa and INTERNATIONAL is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Global Real and International E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International E Equity and Dfa Global 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 Global Real are associated (or correlated) with International Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International E Equity has no effect on the direction of Dfa Global i.e., Dfa Global and International Core go up and down completely randomly.
Pair Corralation between Dfa Global and International Core
Assuming the 90 days horizon Dfa Global Real is expected to under-perform the International Core. In addition to that, Dfa Global is 1.35 times more volatile than International E Equity. It trades about -0.06 of its total potential returns per unit of risk. International E Equity is currently generating about 0.04 per unit of volatility. If you would invest 1,585 in International E Equity on November 2, 2024 and sell it today you would earn a total of 28.00 from holding International E Equity or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Global Real vs. International E Equity
Performance |
| Timeline |
| Dfa Global Real |
| International E Equity |
Dfa Global and International Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Global and International Core
The main advantage of trading using opposite Dfa Global and International Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Global position performs unexpectedly, International Core 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 International Core will offset losses from the drop in International Core's long position.| Dfa Global vs. International E Equity | Dfa Global vs. Emerging Markets E | Dfa Global vs. Us E Equity | Dfa Global vs. Dfa International Small |
| International Core vs. Emerging Markets E | International Core vs. Us E Equity | International Core vs. Us E Equity | International Core vs. Dfa Real Estate |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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