Correlation Between Dfa Inflation and Dfa Real
Can any of the company-specific risk be diversified away by investing in both Dfa Inflation and Dfa Real 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 Inflation and Dfa Real into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa Inflation Protected and Dfa Real Estate, you can compare the effects of market volatilities on Dfa Inflation and Dfa Real 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 Inflation with a short position of Dfa Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Inflation and Dfa Real.
Diversification Opportunities for Dfa Inflation and Dfa Real
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dfa and Dfa is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Inflation Protected and Dfa Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Real Estate and Dfa Inflation 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 Inflation Protected are associated (or correlated) with Dfa Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Real Estate has no effect on the direction of Dfa Inflation i.e., Dfa Inflation and Dfa Real go up and down completely randomly.
Pair Corralation between Dfa Inflation and Dfa Real
Assuming the 90 days horizon Dfa Inflation is expected to generate 20.1 times less return on investment than Dfa Real. But when comparing it to its historical volatility, Dfa Inflation Protected is 3.36 times less risky than Dfa Real. It trades about 0.03 of its potential returns per unit of risk. Dfa Real Estate is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,280 in Dfa Real Estate on September 1, 2024 and sell it today you would earn a total of 156.00 from holding Dfa Real Estate or generate 3.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dfa Inflation Protected vs. Dfa Real Estate
Performance |
| Timeline |
| Dfa Inflation Protected |
| Dfa Real Estate |
Dfa Inflation and Dfa Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Inflation and Dfa Real
The main advantage of trading using opposite Dfa Inflation and Dfa Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Inflation position performs unexpectedly, Dfa Real 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 Dfa Real will offset losses from the drop in Dfa Real's long position.| Dfa Inflation vs. International E Equity | Dfa Inflation vs. Dfa Real Estate | Dfa Inflation vs. Emerging Markets E | Dfa Inflation vs. Dfa Five Year Global |
| Dfa Real vs. Dfa International Small | Dfa Real vs. Us Large Cap | Dfa Real vs. International Small Pany | Dfa Real vs. Dfa International 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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