Correlation Between American Funds and Dfa Commodity
Can any of the company-specific risk be diversified away by investing in both American Funds and Dfa Commodity 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 American Funds and Dfa Commodity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Retirement and Dfa Commodity Strategy, you can compare the effects of market volatilities on American Funds and Dfa Commodity 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 American Funds with a short position of Dfa Commodity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Dfa Commodity.
Diversification Opportunities for American Funds and Dfa Commodity
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Dfa is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Retirement and Dfa Commodity Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Commodity Strategy and American Funds 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 American Funds Retirement are associated (or correlated) with Dfa Commodity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Commodity Strategy has no effect on the direction of American Funds i.e., American Funds and Dfa Commodity go up and down completely randomly.
Pair Corralation between American Funds and Dfa Commodity
Assuming the 90 days horizon American Funds Retirement is expected to generate 0.55 times more return on investment than Dfa Commodity. However, American Funds Retirement is 1.82 times less risky than Dfa Commodity. It trades about 0.09 of its potential returns per unit of risk. Dfa Commodity Strategy is currently generating about -0.01 per unit of risk. If you would invest 1,079 in American Funds Retirement on September 2, 2024 and sell it today you would earn a total of 206.00 from holding American Funds Retirement or generate 19.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Retirement vs. Dfa Commodity Strategy
Performance |
| Timeline |
| American Funds Retirement |
| Dfa Commodity Strategy |
American Funds and Dfa Commodity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Dfa Commodity
The main advantage of trading using opposite American Funds and Dfa Commodity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Dfa Commodity 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 Commodity will offset losses from the drop in Dfa Commodity's long position.| American Funds vs. Shelton Emerging Markets | American Funds vs. Pnc Emerging Markets | American Funds vs. Dws Emerging Markets | American Funds vs. Doubleline Emerging Markets |
| Dfa Commodity vs. Intal High Relative | Dfa Commodity vs. Dfa International | Dfa Commodity vs. Dfa Inflation Protected | Dfa Commodity 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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