Correlation Between Dfa Sustainability and Us Micro

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

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

Diversification Opportunities for Dfa Sustainability and Us Micro

0.93

Correlation Coefficient

Dfa Sustainability  Us Micro

Almost no diversification

The 3 months correlation between Dfa and DFSCX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Sustainability Targeted and Us Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Micro Cap and Dfa Sustainability 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 Dfa Sustainability Targeted are associated (or correlated) with Us Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Micro Cap has no effect on the direction of Dfa Sustainability i.e., Dfa Sustainability and Us Micro go up and down completely randomly.

Pair Corralation between Dfa Sustainability and Us Micro

Assuming the 90 days horizon Dfa Sustainability is expected to generate 1.4 times less return on investment than Us Micro. In addition to that, Dfa Sustainability is 1.02 times more volatile than Us Micro Cap. It trades about 0.06 of its total potential returns per unit of risk. Us Micro Cap is currently generating about 0.08 per unit of volatility. If you would invest  2,730  in Us Micro Cap on May 14, 2025 and sell it today you would earn a total of  137.00  from holding Us Micro Cap or generate 5.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Dfa Sustainability Targeted  vs.  Us Micro Cap

Dfa Sustainability

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Sustainability Targeted are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Dfa Sustainability is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Us Micro Cap

Risk-Adjusted Performance

Mild

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

Pair Trading with Dfa Sustainability and Us Micro

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

The idea behind Dfa Sustainability Targeted and Us Micro Cap 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 Transaction History module to view history of all your transactions and understand their impact on performance.