Correlation Between Us Lg and Dfa International

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

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

Diversification Opportunities for Us Lg and Dfa International

-0.57

Correlation Coefficient

Us Lg  Dfa International

Excellent diversification

The 3 months correlation between DUSQX and Dfa is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Us Lg Cap and Dfa International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa International Value and Us Lg 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 Lg Cap are associated (or correlated) with Dfa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa International Value has no effect on the direction of Us Lg i.e., Us Lg and Dfa International go up and down completely randomly.

Pair Corralation between Us Lg and Dfa International

Assuming the 90 days horizon Us Lg Cap is expected to generate 0.9 times more return on investment than Dfa International. However, Us Lg Cap is 1.11 times less risky than Dfa International. It trades about 0.18 of its potential returns per unit of risk. Dfa International Value is currently generating about -0.04 per unit of risk. If you would invest  3,107  in Us Lg Cap on September 14, 2024 and sell it today you would earn a total of  241.00  from holding Us Lg Cap or generate 7.76% return on investment over 90 days.

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

Us Lg Cap  vs.  Dfa International Value

Us Lg Cap

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Us Lg Cap are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Us Lg may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dfa International Value

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dfa International Value has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Dfa International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Us Lg and Dfa International

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

The idea behind Us Lg Cap and Dfa International Value 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.