Correlation Between Dana Large and Dfa One-year

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

By analyzing existing cross correlation between Dana Large Cap and Dfa One Year Fixed, you can compare the effects of market volatilities on Dana Large and Dfa One-year 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 Dana Large with a short position of Dfa One-year. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dana Large and Dfa One-year.

Diversification Opportunities for Dana Large and Dfa One-year

-0.74

Correlation Coefficient

Dana Large  Dfa One-year

Pay attention - limited upside

The 3 months correlation between Dana and Dfa is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dana Large Cap and Dfa One Year Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa One Year and Dana 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 Dana Large Cap are associated (or correlated) with Dfa One-year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa One Year has no effect on the direction of Dana Large i.e., Dana Large and Dfa One-year go up and down completely randomly.

Pair Corralation between Dana Large and Dfa One-year

Assuming the 90 days horizon Dana Large Cap is expected to under-perform the Dfa One-year. In addition to that, Dana Large is 62.32 times more volatile than Dfa One Year Fixed. It trades about -0.14 of its total potential returns per unit of risk. Dfa One Year Fixed is currently generating about 0.43 per unit of volatility. If you would invest  1,016  in Dfa One Year Fixed on December 20, 2024 and sell it today you would earn a total of  11.00  from holding Dfa One Year Fixed or generate 1.08% return on investment over 90 days.

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

Dana Large Cap  vs.  Dfa One Year Fixed

Dana Large Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dana Large Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Dfa One Year

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa One Year Fixed are ranked lower than 33 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Dfa One-year is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dana Large and Dfa One-year

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

The idea behind Dana Large Cap and Dfa One Year Fixed 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 Global Correlations module to find global opportunities by holding instruments from different markets.