Correlation Between Dfa Emerging and Rbc Short

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

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

Diversification Opportunities for Dfa Emerging and Rbc Short

-0.48

Correlation Coefficient

Dfa Emerging  Rbc Short

Very good diversification

The 3 months correlation between Dfa and Rbc is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Emerging Markets and Rbc Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rbc Short Duration and Dfa Emerging 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 Emerging Markets are associated (or correlated) with Rbc Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rbc Short Duration has no effect on the direction of Dfa Emerging i.e., Dfa Emerging and Rbc Short go up and down completely randomly.

Pair Corralation between Dfa Emerging and Rbc Short

Assuming the 90 days horizon Dfa Emerging Markets is expected to under-perform the Rbc Short. In addition to that, Dfa Emerging is 5.18 times more volatile than Rbc Short Duration. It trades about -0.08 of its total potential returns per unit of risk. Rbc Short Duration is currently generating about 0.12 per unit of volatility. If you would invest  965.00  in Rbc Short Duration on October 25, 2024 and sell it today you would earn a total of  9.00  from holding Rbc Short Duration or generate 0.93% return on investment over 90 days.

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

Dfa Emerging Markets  vs.  Rbc Short Duration

Dfa Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Rbc Short Duration

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rbc Short Duration are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Rbc Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dfa Emerging and Rbc Short

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

The idea behind Dfa Emerging Markets and Rbc Short Duration 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.