Correlation Between Dfa Commodity and Global Allocation

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

By analyzing existing cross correlation between Dfa Commodity Strategy and Global Allocation 6040, you can compare the effects of market volatilities on Dfa Commodity and Global Allocation 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 Commodity with a short position of Global Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Commodity and Global Allocation.

Diversification Opportunities for Dfa Commodity and Global Allocation

0.56

Correlation Coefficient

Dfa Commodity  Global Allocation

Very weak diversification

The 3 months correlation between Dfa and Global is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Commodity Strategy and Global Allocation 6040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Allocation 6040 and Dfa Commodity 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 Commodity Strategy are associated (or correlated) with Global Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Allocation 6040 has no effect on the direction of Dfa Commodity i.e., Dfa Commodity and Global Allocation go up and down completely randomly.

Pair Corralation between Dfa Commodity and Global Allocation

Assuming the 90 days horizon Dfa Commodity is expected to generate 1.84 times less return on investment than Global Allocation. In addition to that, Dfa Commodity is 1.91 times more volatile than Global Allocation 6040. It trades about 0.08 of its total potential returns per unit of risk. Global Allocation 6040 is currently generating about 0.27 per unit of volatility. If you would invest  2,088  in Global Allocation 6040 on May 2, 2025 and sell it today you would earn a total of  145.00  from holding Global Allocation 6040 or generate 6.94% return on investment over 90 days.

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

Dfa Commodity Strategy  vs.  Global Allocation 6040

Dfa Commodity Strategy

Risk-Adjusted Performance

Modest

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

Global Allocation 6040

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Allocation 6040 are ranked lower than 21 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Global Allocation may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Dfa Commodity and Global Allocation

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

The idea behind Dfa Commodity Strategy and Global Allocation 6040 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.