Correlation Between College Retirement and Dfa Us

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

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

Diversification Opportunities for College Retirement and Dfa Us

0.74

Correlation Coefficient

College Retirement  Dfa Us

Poor diversification

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

Pair Corralation between College Retirement and Dfa Us

Assuming the 90 days trading horizon College Retirement is expected to generate 2.17 times less return on investment than Dfa Us. But when comparing it to its historical volatility, College Retirement Equities is 1.22 times less risky than Dfa Us. It trades about 0.12 of its potential returns per unit of risk. Dfa Sustainability Targeted is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  1,972  in Dfa Sustainability Targeted on October 24, 2024 and sell it today you would earn a total of  80.00  from holding Dfa Sustainability Targeted or generate 4.06% return on investment over 90 days.

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

College Retirement Equities  vs.  Dfa Sustainability Targeted

College Retirement

Risk-Adjusted Performance

6 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in College Retirement Equities are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, College Retirement is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dfa Sustainability

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Sustainability Targeted are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Dfa Us is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with College Retirement and Dfa Us

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

The idea behind College Retirement Equities and Dfa Sustainability Targeted 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.