Correlation Between Dfa Mn and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Dfa Mn 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 Mn 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 Mn Municipal and Emerging Markets Value, you can compare the effects of market volatilities on Dfa Mn 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 Mn with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Mn and Emerging Markets.
Diversification Opportunities for Dfa Mn and Emerging Markets
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dfa and EMERGING is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Mn Municipal and Emerging Markets Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Value and Dfa Mn 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 Mn Municipal 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 Value has no effect on the direction of Dfa Mn i.e., Dfa Mn and Emerging Markets go up and down completely randomly.
Pair Corralation between Dfa Mn and Emerging Markets
Assuming the 90 days horizon Dfa Mn is expected to generate 3.7 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Dfa Mn Municipal is 11.94 times less risky than Emerging Markets. It trades about 0.18 of its potential returns per unit of risk. Emerging Markets Value is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,516 in Emerging Markets Value on November 9, 2024 and sell it today you would earn a total of 517.00 from holding Emerging Markets Value or generate 20.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Mn Municipal vs. Emerging Markets Value
Performance |
| Timeline |
| Dfa Mn Municipal |
| Emerging Markets Value |
Dfa Mn and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Mn and Emerging Markets
The main advantage of trading using opposite Dfa Mn and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Mn 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.The idea behind Dfa Mn Municipal and Emerging Markets Value pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Emerging Markets vs. Dfa International Small | Emerging Markets vs. International Small Pany | Emerging Markets vs. Emerging Markets Small | Emerging Markets 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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