Correlation Between Dfa - and Us Core

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

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

Diversification Opportunities for Dfa - and Us Core

-0.25

Correlation Coefficient

Dfa -  Us Core

Very good diversification

The 3 months correlation between Dfa and DFQTX is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Dfa International and Us E Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us E Equity and Dfa - 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 are associated (or correlated) with Us Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us E Equity has no effect on the direction of Dfa - i.e., Dfa - and Us Core go up and down completely randomly.

Pair Corralation between Dfa - and Us Core

Assuming the 90 days horizon Dfa International is expected to generate 0.84 times more return on investment than Us Core. However, Dfa International is 1.18 times less risky than Us Core. It trades about 0.15 of its potential returns per unit of risk. Us E Equity is currently generating about -0.05 per unit of risk. If you would invest  1,597  in Dfa International on December 28, 2024 and sell it today you would earn a total of  117.00  from holding Dfa International or generate 7.33% return on investment over 90 days.

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

Dfa International  vs.  Us E Equity

Dfa International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa International are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dfa - may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Us E Equity

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us E Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Us Core 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 - and Us Core

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

The idea behind Dfa International and Us E Equity 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.