Correlation Between Dfa Ltip and Us Large

Can any of the company-specific risk be diversified away by investing in both Dfa Ltip 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 Ltip 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 Ltip Portfolio and Us Large Pany, you can compare the effects of market volatilities on Dfa Ltip 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 Ltip with a short position of Us Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Ltip and Us Large.

Diversification Opportunities for Dfa Ltip and Us Large

-0.69

Correlation Coefficient

Dfa Ltip  Us Large

Excellent diversification

The 3 months correlation between Dfa and DFUSX is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Ltip Portfolio 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 Ltip 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 Ltip Portfolio 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 Ltip i.e., Dfa Ltip and Us Large go up and down completely randomly.

Pair Corralation between Dfa Ltip and Us Large

Assuming the 90 days horizon Dfa Ltip Portfolio is expected to under-perform the Us Large. In addition to that, Dfa Ltip is 1.22 times more volatile than Us Large Pany. It trades about -0.01 of its total potential returns per unit of risk. Us Large Pany is currently generating about 0.1 per unit of volatility. If you would invest  3,618  in Us Large Pany on September 15, 2024 and sell it today you would earn a total of  391.00  from holding Us Large Pany or generate 10.81% return on investment over 90 days.

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

Dfa Ltip Portfolio  vs.  Us Large Pany

Dfa Ltip Portfolio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dfa Ltip Portfolio has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Ltip and Us Large

The main advantage of trading using opposite Dfa Ltip and Us Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Ltip 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 Ltip Portfolio 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.