Correlation Between DFA Global and Guardian

Can any of the company-specific risk be diversified away by investing in both DFA Global and Guardian 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 Global and Guardian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DFA Global Investment and Guardian i3 Global, you can compare the effects of market volatilities on DFA Global and Guardian 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 Global with a short position of Guardian. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFA Global and Guardian.

Diversification Opportunities for DFA Global and Guardian

0.0

Correlation Coefficient

DFA Global  Guardian

Pay attention - limited upside

The 3 months correlation between DFA and Guardian is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DFA Global Investment and Guardian i3 Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guardian i3 Global and DFA Global 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 Global Investment are associated (or correlated) with Guardian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guardian i3 Global has no effect on the direction of DFA Global i.e., DFA Global and Guardian go up and down completely randomly.

Pair Corralation between DFA Global and Guardian

Assuming the 90 days trading horizon DFA Global Investment is expected to generate 0.57 times more return on investment than Guardian. However, DFA Global Investment is 1.76 times less risky than Guardian. It trades about -0.1 of its potential returns per unit of risk. Guardian i3 Global is currently generating about -0.7 per unit of risk. If you would invest  931.00  in DFA Global Investment on December 14, 2024 and sell it today you would lose (18.00) from holding DFA Global Investment or give up 1.93% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	13.33%
Values	Daily Returns

DFA Global Investment  vs.  Guardian i3 Global

DFA Global Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days DFA Global Investment has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent forward-looking signals, DFA Global is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Guardian i3 Global

Risk-Adjusted Performance

Very Weak

Over the last 90 days Guardian i3 Global has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the fund investors.

Pair Trading with DFA Global and Guardian

The main advantage of trading using opposite DFA Global and Guardian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFA Global position performs unexpectedly, Guardian 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 Guardian will offset losses from the drop in Guardian's long position.

The idea behind DFA Global Investment and Guardian i3 Global 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.

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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.