Correlation Between Dfa International and Salient International
Can any of the company-specific risk be diversified away by investing in both Dfa International and Salient International 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 International and Salient International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa International Real and Salient International Real, you can compare the effects of market volatilities on Dfa International and Salient International 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 International with a short position of Salient International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa International and Salient International.
Diversification Opportunities for Dfa International and Salient International
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dfa and Salient is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Dfa International Real and Salient International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient International and Dfa International 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 International Real are associated (or correlated) with Salient International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient International has no effect on the direction of Dfa International i.e., Dfa International and Salient International go up and down completely randomly.
Pair Corralation between Dfa International and Salient International
Assuming the 90 days horizon Dfa International is expected to generate 2.59 times less return on investment than Salient International. But when comparing it to its historical volatility, Dfa International Real is 1.06 times less risky than Salient International. It trades about 0.01 of its potential returns per unit of risk. Salient International Real is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,158 in Salient International Real on September 3, 2024 and sell it today you would earn a total of 168.00 from holding Salient International Real or generate 14.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa International Real vs. Salient International Real
Performance |
| Timeline |
| Dfa International Real |
| Salient International |
Dfa International and Salient International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa International and Salient International
The main advantage of trading using opposite Dfa International and Salient International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa International position performs unexpectedly, Salient International 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 Salient International will offset losses from the drop in Salient International's long position.| Dfa International vs. T Rowe Price | Dfa International vs. Franklin Lifesmart 2050 | Dfa International vs. Jp Morgan Smartretirement | Dfa International vs. Legg Mason Partners |
| Salient International vs. American Mutual Fund | Salient International vs. Tax Managed Large Cap | Salient International vs. Americafirst Large Cap | Salient International vs. Dodge Cox Stock |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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