Correlation Between Cargile Fund and Dfa Large

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

By analyzing existing cross correlation between Cargile Fund and Dfa Large, you can compare the effects of market volatilities on Cargile Fund and Dfa Large 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 Cargile Fund with a short position of Dfa Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cargile Fund and Dfa Large.

Diversification Opportunities for Cargile Fund and Dfa Large

0.91

Correlation Coefficient

Cargile Fund  Dfa Large

Almost no diversification

The 3 months correlation between Cargile and Dfa is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Cargile Fund and Dfa Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Large and Cargile Fund 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 Cargile Fund are associated (or correlated) with Dfa Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Large has no effect on the direction of Cargile Fund i.e., Cargile Fund and Dfa Large go up and down completely randomly.

Pair Corralation between Cargile Fund and Dfa Large

Assuming the 90 days horizon Cargile Fund is expected to generate 0.27 times more return on investment than Dfa Large. However, Cargile Fund is 3.72 times less risky than Dfa Large. It trades about -0.02 of its potential returns per unit of risk. Dfa Large is currently generating about -0.14 per unit of risk. If you would invest  911.00  in Cargile Fund on September 24, 2024 and sell it today you would lose (1.00) from holding Cargile Fund or give up 0.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Cargile Fund  vs.  Dfa Large

Cargile Fund

Risk-Adjusted Performance

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cargile Fund are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Cargile Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dfa Large

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Large are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Dfa Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cargile Fund and Dfa Large

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

The idea behind Cargile Fund and Dfa Large 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.

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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.