Correlation Between Dfa California and Dimensional 2060

Can any of the company-specific risk be diversified away by investing in both Dfa California and Dimensional 2060 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 California and Dimensional 2060 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dfa California Municipal and Dimensional 2060 Target, you can compare the effects of market volatilities on Dfa California and Dimensional 2060 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 California with a short position of Dimensional 2060. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa California and Dimensional 2060.

Diversification Opportunities for Dfa California and Dimensional 2060

0.92

Correlation Coefficient

Dfa California  Dimensional 2060

Almost no diversification

The 3 months correlation between Dfa and Dimensional is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dfa California Municipal and Dimensional 2060 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2060 Target and Dfa California 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 California Municipal are associated (or correlated) with Dimensional 2060. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2060 Target has no effect on the direction of Dfa California i.e., Dfa California and Dimensional 2060 go up and down completely randomly.

Pair Corralation between Dfa California and Dimensional 2060

Assuming the 90 days horizon Dfa California is expected to generate 7.02 times less return on investment than Dimensional 2060. But when comparing it to its historical volatility, Dfa California Municipal is 9.94 times less risky than Dimensional 2060. It trades about 0.31 of its potential returns per unit of risk. Dimensional 2060 Target is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  2,031  in Dimensional 2060 Target on May 16, 2025 and sell it today you would earn a total of  167.00  from holding Dimensional 2060 Target or generate 8.22% return on investment over 90 days.

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

Dfa California Municipal  vs.  Dimensional 2060 Target

Dfa California Municipal

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa California Municipal are ranked lower than 24 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dfa California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dimensional 2060 Target

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional 2060 Target are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Dimensional 2060 may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Dfa California and Dimensional 2060

The main advantage of trading using opposite Dfa California and Dimensional 2060 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa California position performs unexpectedly, Dimensional 2060 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 Dimensional 2060 will offset losses from the drop in Dimensional 2060's long position.

The idea behind Dfa California Municipal and Dimensional 2060 Target 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.