Correlation Between Stellar and Dfa Us

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

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

Diversification Opportunities for Stellar and Dfa Us

0.76

Correlation Coefficient

Stellar  Dfa Us

Poor diversification

The 3 months correlation between Stellar and Dfa is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Dfa Social Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Social Core and Stellar 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 Stellar 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 Social Core has no effect on the direction of Stellar i.e., Stellar and Dfa Us go up and down completely randomly.

Pair Corralation between Stellar and Dfa Us

Assuming the 90 days trading horizon Stellar is expected to generate 17.5 times more return on investment than Dfa Us. However, Stellar is 17.5 times more volatile than Dfa Social Core. It trades about 0.31 of its potential returns per unit of risk. Dfa Social Core is currently generating about -0.04 per unit of risk. If you would invest  10.00  in Stellar on October 9, 2024 and sell it today you would earn a total of  34.00  from holding Stellar or generate 340.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.86%
Values	Daily Returns

Stellar  vs.  Dfa Social Core

Stellar

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stellar are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, Stellar exhibited solid returns over the last few months and may actually be approaching a breakup point.

Dfa Social Core

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Social Core are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, 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 Stellar and Dfa Us

The main advantage of trading using opposite Stellar and Dfa Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar 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 Stellar and Dfa Social Core 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.