Correlation Between Small Cap and Dfa Emerging
Can any of the company-specific risk be diversified away by investing in both Small Cap and Dfa Emerging 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 Small Cap and Dfa Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Stock and Dfa Emerging Markets, you can compare the effects of market volatilities on Small Cap and Dfa Emerging 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 Small Cap with a short position of Dfa Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Cap and Dfa Emerging.
Diversification Opportunities for Small Cap and Dfa Emerging
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Small and Dfa is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Stock and Dfa Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Emerging Markets and Small Cap 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 Small Cap Stock are associated (or correlated) with Dfa Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Emerging Markets has no effect on the direction of Small Cap i.e., Small Cap and Dfa Emerging go up and down completely randomly.
Pair Corralation between Small Cap and Dfa Emerging
Assuming the 90 days horizon Small Cap Stock is expected to generate 2.42 times more return on investment than Dfa Emerging. However, Small Cap is 2.42 times more volatile than Dfa Emerging Markets. It trades about 0.26 of its potential returns per unit of risk. Dfa Emerging Markets is currently generating about -0.08 per unit of risk. If you would invest 1,401 in Small Cap Stock on September 4, 2024 and sell it today you would earn a total of 128.00 from holding Small Cap Stock or generate 9.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Stock vs. Dfa Emerging Markets
Performance |
| Timeline |
| Small Cap Stock |
| Dfa Emerging Markets |
Small Cap and Dfa Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Cap and Dfa Emerging
The main advantage of trading using opposite Small Cap and Dfa Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Cap position performs unexpectedly, Dfa Emerging 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 Emerging will offset losses from the drop in Dfa Emerging's long position.| Small Cap vs. Income Fund Income | Small Cap vs. Usaa Nasdaq 100 | Small Cap vs. Intermediate Term Bond Fund | Small Cap vs. Usaa Intermediate Term |
| Dfa Emerging vs. Small Cap Stock | Dfa Emerging vs. Wasatch Small Cap | Dfa Emerging vs. Northern Small Cap | Dfa Emerging vs. T Rowe Price |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Global Correlations Find global opportunities by holding instruments from different markets | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Top Crypto Exchanges Search and analyze digital assets across top global cryptocurrency exchanges | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |