Correlation Between Us Targeted and Dfa International

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

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

Diversification Opportunities for Us Targeted and Dfa International

0.75

Correlation Coefficient

Us Targeted  Dfa International

Poor diversification

The 3 months correlation between DFFVX and Dfa is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Us Targeted Value and Dfa International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa International Real and Us Targeted 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 Us Targeted Value are associated (or correlated) with Dfa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa International Real has no effect on the direction of Us Targeted i.e., Us Targeted and Dfa International go up and down completely randomly.

Pair Corralation between Us Targeted and Dfa International

Assuming the 90 days horizon Us Targeted Value is expected to under-perform the Dfa International. But the mutual fund apears to be less risky and, when comparing its historical volatility, Us Targeted Value is 1.05 times less risky than Dfa International. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Dfa International Real is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  360.00  in Dfa International Real on February 5, 2024 and sell it today you would earn a total of  1.00  from holding Dfa International Real or generate 0.28% return on investment over 90 days.

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

Us Targeted Value  vs.  Dfa International Real

Us Targeted Value

Risk-Adjusted Performance

6 of 100

Modest

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

Dfa International Real

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa International Real are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dfa International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Us Targeted and Dfa International

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

The idea behind Us Targeted Value and Dfa International Real 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.