Correlation Between Sit International and Dfa Global

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

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

Diversification Opportunities for Sit International and Dfa Global

0.58

Correlation Coefficient

Sit International  Dfa Global

Very weak diversification

The 3 months correlation between Sit and Dfa is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Sit International Growth and Dfa Global Social in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Global Social and Sit International 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 Sit International Growth are associated (or correlated) with Dfa Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Global Social has no effect on the direction of Sit International i.e., Sit International and Dfa Global go up and down completely randomly.

Pair Corralation between Sit International and Dfa Global

Assuming the 90 days horizon Sit International Growth is expected to under-perform the Dfa Global. In addition to that, Sit International is 1.35 times more volatile than Dfa Global Social. It trades about -0.09 of its total potential returns per unit of risk. Dfa Global Social is currently generating about -0.11 per unit of volatility. If you would invest  1,529  in Dfa Global Social on October 9, 2024 and sell it today you would lose (49.00) from holding Dfa Global Social or give up 3.2% of portfolio value over 90 days.

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

Sit International Growth  vs.  Dfa Global Social

Sit International Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dfa Global Social

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Sit International and Dfa Global

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

The idea behind Sit International Growth and Dfa Global Social 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.