Correlation Between Dfa Investment and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Dfa Investment 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 Investment 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 Investment Dimensions and Emerging Markets Sustainability, you can compare the effects of market volatilities on Dfa Investment 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 Investment with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Investment and Emerging Markets.
Diversification Opportunities for Dfa Investment and Emerging Markets
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dfa and Emerging is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Investment Dimensions and Emerging Markets Sustainabilit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Sus and Dfa Investment 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 Investment Dimensions 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 Sus has no effect on the direction of Dfa Investment i.e., Dfa Investment and Emerging Markets go up and down completely randomly.
Pair Corralation between Dfa Investment and Emerging Markets
Assuming the 90 days horizon Dfa Investment Dimensions is expected to generate 0.36 times more return on investment than Emerging Markets. However, Dfa Investment Dimensions is 2.77 times less risky than Emerging Markets. It trades about -0.06 of its potential returns per unit of risk. Emerging Markets Sustainability is currently generating about -0.1 per unit of risk. If you would invest 936.00 in Dfa Investment Dimensions on October 21, 2024 and sell it today you would lose (3.00) from holding Dfa Investment Dimensions or give up 0.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Investment Dimensions vs. Emerging Markets Sustainabilit
Performance |
| Timeline |
| Dfa Investment Dimensions |
| Emerging Markets Sus |
Dfa Investment and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Investment and Emerging Markets
The main advantage of trading using opposite Dfa Investment and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Investment 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 Investment vs. Intal High Relative | Dfa Investment vs. Dfa International | Dfa Investment vs. Dfa Inflation Protected | Dfa Investment vs. Dfa International Small |
| Emerging Markets vs. Intal High Relative | Emerging Markets vs. Dfa International | Emerging Markets vs. Dfa Inflation Protected | Emerging Markets vs. Dfa International Small |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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