Correlation Between Dfa International and Third Avenue
Can any of the company-specific risk be diversified away by investing in both Dfa International and Third Avenue 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 Third Avenue 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 Third Avenue Real, you can compare the effects of market volatilities on Dfa International and Third Avenue 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 Third Avenue. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa International and Third Avenue.
Diversification Opportunities for Dfa International and Third Avenue
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dfa and Third is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dfa International Real and Third Avenue Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Avenue Real 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 Third Avenue. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Avenue Real has no effect on the direction of Dfa International i.e., Dfa International and Third Avenue go up and down completely randomly.
Pair Corralation between Dfa International and Third Avenue
Assuming the 90 days horizon Dfa International Real is expected to under-perform the Third Avenue. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dfa International Real is 1.6 times less risky than Third Avenue. The mutual fund trades about -0.14 of its potential returns per unit of risk. The Third Avenue Real is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,415 in Third Avenue Real on August 29, 2024 and sell it today you would earn a total of 200.00 from holding Third Avenue Real or generate 8.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa International Real vs. Third Avenue Real
Performance |
| Timeline |
| Dfa International Real |
| Third Avenue Real |
Dfa International and Third Avenue Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa International and Third Avenue
The main advantage of trading using opposite Dfa International and Third Avenue positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa International position performs unexpectedly, Third Avenue 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 Third Avenue will offset losses from the drop in Third Avenue's long position.| Dfa International vs. Ambrus Core Bond | Dfa International vs. Transamerica Funds | Dfa International vs. Nuveen Massachusetts Municipal | Dfa International vs. Blrc Sgy Mnp |
| Third Avenue vs. Third Avenue Small Cap | Third Avenue vs. Baron Real Estate | Third Avenue vs. Third Avenue Value | Third Avenue vs. Artisan Global Value |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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