Correlation Between TRON and Dfa Emerging

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

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

Diversification Opportunities for TRON and Dfa Emerging

-0.41

Correlation Coefficient

TRON  Dfa Emerging

Very good diversification

The 3 months correlation between TRON and Dfa is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding TRON and Dfa Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Emerging Markets and TRON 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 TRON are associated (or correlated) with Dfa Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Emerging Markets has no effect on the direction of TRON i.e., TRON and Dfa Emerging go up and down completely randomly.

Pair Corralation between TRON and Dfa Emerging

Assuming the 90 days trading horizon TRON is expected to generate 30.08 times more return on investment than Dfa Emerging. However, TRON is 30.08 times more volatile than Dfa Emerging Markets. It trades about 0.13 of its potential returns per unit of risk. Dfa Emerging Markets is currently generating about -0.2 per unit of risk. If you would invest  16.00  in TRON on October 9, 2024 and sell it today you would earn a total of  11.00  from holding TRON or generate 68.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.86%
Values	Daily Returns

TRON  vs.  Dfa Emerging Markets

TRON

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TRON are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, TRON exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dfa Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dfa Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with TRON and Dfa Emerging

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

The idea behind TRON and Dfa Emerging Markets 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.

Check out your portfolio center.

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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.