Correlation Between Dfa Global and Us Large

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

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

Diversification Opportunities for Dfa Global and Us Large

-0.68

Correlation Coefficient

Dfa Global  Us Large

Excellent diversification

The 3 months correlation between Dfa and DFUSX is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Global Real and Us Large Pany in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Large Pany and Dfa Global 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 Global Real are associated (or correlated) with Us Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Large Pany has no effect on the direction of Dfa Global i.e., Dfa Global and Us Large go up and down completely randomly.

Pair Corralation between Dfa Global and Us Large

Assuming the 90 days horizon Dfa Global Real is expected to under-perform the Us Large. In addition to that, Dfa Global is 1.26 times more volatile than Us Large Pany. It trades about -0.2 of its total potential returns per unit of risk. Us Large Pany is currently generating about 0.17 per unit of volatility. If you would invest  3,736  in Us Large Pany on September 15, 2024 and sell it today you would earn a total of  273.00  from holding Us Large Pany or generate 7.31% return on investment over 90 days.

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

Dfa Global Real  vs.  Us Large Pany

Dfa Global Real

Risk-Adjusted Performance

0 of 100

Very Weak

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

Us Large Pany

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Us Large Pany are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dfa Global and Us Large

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

The idea behind Dfa Global Real and Us Large Pany 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.