Correlation Between Dfa International and James Alpha

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

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

Diversification Opportunities for Dfa International and James Alpha

0.93

Correlation Coefficient

Dfa International  James Alpha

Almost no diversification

The 3 months correlation between Dfa and James is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dfa International Real and James Alpha Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on James Alpha Global and Dfa International 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 International Real are associated (or correlated) with James Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of James Alpha Global has no effect on the direction of Dfa International i.e., Dfa International and James Alpha go up and down completely randomly.

Pair Corralation between Dfa International and James Alpha

Assuming the 90 days horizon Dfa International Real is expected to generate 0.81 times more return on investment than James Alpha. However, Dfa International Real is 1.24 times less risky than James Alpha. It trades about 0.09 of its potential returns per unit of risk. James Alpha Global is currently generating about 0.07 per unit of risk. If you would invest  329.00  in Dfa International Real on December 27, 2024 and sell it today you would earn a total of  13.00  from holding Dfa International Real or generate 3.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.36%
Values	Daily Returns

Dfa International Real  vs.  James Alpha Global

Dfa International Real

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa International Real are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dfa International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

James Alpha Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in James Alpha Global are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, James Alpha 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 International and James Alpha

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

The idea behind Dfa International Real and James Alpha Global 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.