Correlation Between Dfa Sustainability and Asia Pacific

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

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

Diversification Opportunities for Dfa Sustainability and Asia Pacific

-0.38

Correlation Coefficient

Dfa Sustainability  Asia Pacific

Very good diversification

The 3 months correlation between Dfa and Asia is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Sustainability Targeted and Asia Pacific Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asia Pacific Small and Dfa Sustainability 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 Sustainability Targeted are associated (or correlated) with Asia Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asia Pacific Small has no effect on the direction of Dfa Sustainability i.e., Dfa Sustainability and Asia Pacific go up and down completely randomly.

Pair Corralation between Dfa Sustainability and Asia Pacific

Assuming the 90 days horizon Dfa Sustainability Targeted is expected to generate 0.9 times more return on investment than Asia Pacific. However, Dfa Sustainability Targeted is 1.11 times less risky than Asia Pacific. It trades about -0.25 of its potential returns per unit of risk. Asia Pacific Small is currently generating about -0.33 per unit of risk. If you would invest  2,079  in Dfa Sustainability Targeted on September 22, 2024 and sell it today you would lose (125.00) from holding Dfa Sustainability Targeted or give up 6.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dfa Sustainability Targeted  vs.  Asia Pacific Small

Dfa Sustainability

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Sustainability Targeted are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Dfa Sustainability is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Asia Pacific Small

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Asia Pacific Small has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Dfa Sustainability and Asia Pacific

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

The idea behind Dfa Sustainability Targeted and Asia Pacific Small 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.