Correlation Between Dfa International and Us Lg
Can any of the company-specific risk be diversified away by investing in both Dfa International and Us Lg 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 Us Lg into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa International Value and Us Lg Cap, you can compare the effects of market volatilities on Dfa International and Us Lg 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 Us Lg. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa International and Us Lg.
Diversification Opportunities for Dfa International and Us Lg
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dfa and DUSQX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dfa International Value and Us Lg Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Lg Cap 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 Value are associated (or correlated) with Us Lg. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Lg Cap has no effect on the direction of Dfa International i.e., Dfa International and Us Lg go up and down completely randomly.
Pair Corralation between Dfa International and Us Lg
Assuming the 90 days horizon Dfa International Value is expected to under-perform the Us Lg. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dfa International Value is 1.08 times less risky than Us Lg. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Us Lg Cap is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,217 in Us Lg Cap on August 31, 2024 and sell it today you would earn a total of 127.00 from holding Us Lg Cap or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa International Value vs. Us Lg Cap
Performance |
| Timeline |
| Dfa International Value |
| Us Lg Cap |
Dfa International and Us Lg Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa International and Us Lg
The main advantage of trading using opposite Dfa International and Us Lg positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa International position performs unexpectedly, Us Lg 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 Us Lg will offset losses from the drop in Us Lg's long position.| Dfa International vs. Loomis Sayles Growth | Dfa International vs. Nuance Mid Cap | Dfa International vs. HUMANA INC | Dfa International vs. Aquagold International |
| Us Lg vs. Dfa International Value | Us Lg vs. Us Large Pany | Us Lg vs. Dfa Investment Grade | Us Lg vs. Dfa Sustainability Core |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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