Correlation Between FlexShares Morningstar and Dfa Intermediate

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

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

Diversification Opportunities for FlexShares Morningstar and Dfa Intermediate

0.54

Correlation Coefficient

FlexShares Morningstar  Dfa Intermediate

Very weak diversification

The 3 months correlation between FlexShares and Dfa is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding FlexShares Morningstar Global and Dfa Intermediate Government in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Intermediate Gov and FlexShares Morningstar 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 FlexShares Morningstar Global are associated (or correlated) with Dfa Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Intermediate Gov has no effect on the direction of FlexShares Morningstar i.e., FlexShares Morningstar and Dfa Intermediate go up and down completely randomly.

Pair Corralation between FlexShares Morningstar and Dfa Intermediate

Given the investment horizon of 90 days FlexShares Morningstar Global is expected to generate 2.53 times more return on investment than Dfa Intermediate. However, FlexShares Morningstar is 2.53 times more volatile than Dfa Intermediate Government. It trades about 0.16 of its potential returns per unit of risk. Dfa Intermediate Government is currently generating about 0.11 per unit of risk. If you would invest  3,591  in FlexShares Morningstar Global on December 29, 2024 and sell it today you would earn a total of  281.00  from holding FlexShares Morningstar Global or generate 7.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

FlexShares Morningstar Global  vs.  Dfa Intermediate Government

FlexShares Morningstar

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FlexShares Morningstar Global are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, FlexShares Morningstar may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dfa Intermediate Gov

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Intermediate Government are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dfa Intermediate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with FlexShares Morningstar and Dfa Intermediate

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

The idea behind FlexShares Morningstar Global and Dfa Intermediate Government 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.