Correlation Between Us Large and Dfa Global

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

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

Diversification Opportunities for Us Large and Dfa Global

-0.68

Correlation Coefficient

Us Large  Dfa Global

Excellent diversification

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

Pair Corralation between Us Large and Dfa Global

Assuming the 90 days horizon Us Large Pany is expected to generate 0.79 times more return on investment than Dfa Global. However, Us Large Pany is 1.26 times less risky than Dfa Global. It trades about 0.17 of its potential returns per unit of risk. Dfa Global Real is currently generating about -0.2 per unit of risk. 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

Us Large Pany  vs.  Dfa Global Real

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.

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.

Pair Trading with Us Large and Dfa Global

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

The idea behind Us Large Pany and Dfa Global Real 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.