Correlation Between Dfa Commodity and Aig Government
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 Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 95.24% |
Values | Daily Returns |
Dfa Commodity Strategy vs. Aig Government Money
Performance |
Timeline |
Dfa Commodity Strategy |
Aig Government Money |
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.Dfa Commodity vs. Dfa Real Estate | Dfa Commodity vs. Real Estate Ultrasector | Dfa Commodity vs. Nuveen Real Estate | Dfa Commodity vs. Nexpoint Real Estate |
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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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