Correlation Between Dfa Real and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Dfa Real 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 Real 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 Real Estate and Emerging Markets Small, you can compare the effects of market volatilities on Dfa Real 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 Real with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Real and Emerging Markets.
Diversification Opportunities for Dfa Real and Emerging Markets
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dfa and Emerging is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Real Estate 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 Real 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 Real Estate 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 Real i.e., Dfa Real and Emerging Markets go up and down completely randomly.
Pair Corralation between Dfa Real and Emerging Markets
Assuming the 90 days horizon Dfa Real Estate is expected to generate 1.36 times more return on investment than Emerging Markets. However, Dfa Real is 1.36 times more volatile than Emerging Markets Small. It trades about 0.15 of its potential returns per unit of risk. Emerging Markets Small is currently generating about 0.04 per unit of risk. If you would invest 3,959 in Dfa Real Estate on November 9, 2024 and sell it today you would earn a total of 139.00 from holding Dfa Real Estate or generate 3.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Real Estate vs. Emerging Markets Small
Performance |
| Timeline |
| Dfa Real Estate |
| Emerging Markets Small |
Dfa Real and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Real and Emerging Markets
The main advantage of trading using opposite Dfa Real and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Real 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 Real vs. Dfa International Small | Dfa Real vs. Us Large Cap | Dfa Real vs. International Small Pany | Dfa Real vs. Dfa International Value |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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