Correlation Between Mid Cap and Dfa Social

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

By analyzing existing cross correlation between Mid Cap 15x Strategy and Dfa Social Fixed, you can compare the effects of market volatilities on Mid Cap and Dfa Social 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 Mid Cap with a short position of Dfa Social. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid Cap and Dfa Social.

Diversification Opportunities for Mid Cap and Dfa Social

-0.53

Correlation Coefficient

Mid Cap  Dfa Social

Excellent diversification

The 3 months correlation between Mid and Dfa is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Dfa Social Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Social Fixed and Mid Cap 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 Mid Cap 15x Strategy are associated (or correlated) with Dfa Social. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Social Fixed has no effect on the direction of Mid Cap i.e., Mid Cap and Dfa Social go up and down completely randomly.

Pair Corralation between Mid Cap and Dfa Social

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 3.67 times more return on investment than Dfa Social. However, Mid Cap is 3.67 times more volatile than Dfa Social Fixed. It trades about 0.04 of its potential returns per unit of risk. Dfa Social Fixed is currently generating about 0.05 per unit of risk. If you would invest  14,071  in Mid Cap 15x Strategy on September 15, 2024 and sell it today you would earn a total of  107.00  from holding Mid Cap 15x Strategy or generate 0.76% return on investment over 90 days.

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

Mid Cap 15x Strategy  vs.  Dfa Social Fixed

Mid Cap 15x

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap 15x Strategy are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Mid Cap may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dfa Social Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mid Cap and Dfa Social

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

The idea behind Mid Cap 15x Strategy and Dfa Social 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.