Correlation Between Dfa Social and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Dfa Social 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 Social 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 Social Fixed and Emerging Markets Small, you can compare the effects of market volatilities on Dfa Social 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 Social with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Social and Emerging Markets.
Diversification Opportunities for Dfa Social and Emerging Markets
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dfa and Emerging is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Social Fixed 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 Social 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 Social Fixed 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 Social i.e., Dfa Social and Emerging Markets go up and down completely randomly.
Pair Corralation between Dfa Social and Emerging Markets
Assuming the 90 days horizon Dfa Social Fixed is expected to generate 0.38 times more return on investment than Emerging Markets. However, Dfa Social Fixed is 2.64 times less risky than Emerging Markets. It trades about 0.04 of its potential returns per unit of risk. Emerging Markets Small is currently generating about -0.15 per unit of risk. If you would invest 895.00 in Dfa Social Fixed on October 20, 2024 and sell it today you would earn a total of 2.00 from holding Dfa Social Fixed or generate 0.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Social Fixed vs. Emerging Markets Small
Performance |
| Timeline |
| Dfa Social Fixed |
| Emerging Markets Small |
Dfa Social and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Social and Emerging Markets
The main advantage of trading using opposite Dfa Social and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Social 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 Social vs. Intal High Relative | Dfa Social vs. Dfa International | Dfa Social vs. Dfa Inflation Protected | Dfa Social vs. Dfa International Small |
| Emerging Markets vs. Elfun Government Money | Emerging Markets vs. Schwab Government Money | Emerging Markets vs. Short Term Government Fund | Emerging Markets vs. Dreyfus Government Cash |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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