Correlation Between Dfa Commodity and Aig Government

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Can any of the company-specific risk be diversified away by investing in both Dfa Commodity and Aig Government 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 Commodity and Aig Government into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa Commodity Strategy and Aig Government Money, you can compare the effects of market volatilities on Dfa Commodity and Aig Government 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 Commodity with a short position of Aig Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Commodity and Aig Government.

Diversification Opportunities for Dfa Commodity and Aig Government

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between Dfa and Aig is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Commodity Strategy and Aig Government Money in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aig Government Money and Dfa Commodity 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 Commodity Strategy are associated (or correlated) with Aig Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aig Government Money has no effect on the direction of Dfa Commodity i.e., Dfa Commodity and Aig Government go up and down completely randomly.

Pair Corralation between Dfa Commodity and Aig Government

Assuming the 90 days horizon Dfa Commodity Strategy is expected to generate 3.48 times more return on investment than Aig Government. However, Dfa Commodity is 3.48 times more volatile than Aig Government Money. It trades about -0.01 of its potential returns per unit of risk. Aig Government Money is currently generating about -0.32 per unit of risk. If you would invest  453.00  in Dfa Commodity Strategy on October 10, 2024 and sell it today you would lose (1.00) from holding Dfa Commodity Strategy or give up 0.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy95.24%
ValuesDaily Returns

Dfa Commodity Strategy  vs.  Aig Government Money

 Performance 
       Timeline  
Dfa Commodity Strategy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dfa Commodity Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Dfa Commodity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Aig Government Money 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Aig Government Money has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Aig Government is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dfa Commodity and Aig Government Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dfa Commodity and Aig Government

The main advantage of trading using opposite Dfa Commodity and Aig Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Commodity position performs unexpectedly, Aig Government 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 Aig Government will offset losses from the drop in Aig Government's long position.
The idea behind Dfa Commodity Strategy and Aig Government Money 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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