Correlation Between Emerging Markets and Dfa Selectively

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

By analyzing existing cross correlation between Emerging Markets E and Dfa Selectively Hedged, you can compare the effects of market volatilities on Emerging Markets and Dfa Selectively 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 Emerging Markets with a short position of Dfa Selectively. Check out your portfolio center. Please also check ongoing floating volatility patterns of Emerging Markets and Dfa Selectively.

Diversification Opportunities for Emerging Markets and Dfa Selectively

0.98

Correlation Coefficient

Emerging Markets  Dfa Selectively

Almost no diversification

The 3 months correlation between Emerging and Dfa is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Emerging Markets E and Dfa Selectively Hedged in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Selectively Hedged and Emerging Markets 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 Emerging Markets E are associated (or correlated) with Dfa Selectively. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Selectively Hedged has no effect on the direction of Emerging Markets i.e., Emerging Markets and Dfa Selectively go up and down completely randomly.

Pair Corralation between Emerging Markets and Dfa Selectively

Assuming the 90 days horizon Emerging Markets E is expected to generate 0.99 times more return on investment than Dfa Selectively. However, Emerging Markets E is 1.01 times less risky than Dfa Selectively. It trades about 0.28 of its potential returns per unit of risk. Dfa Selectively Hedged is currently generating about 0.22 per unit of risk. If you would invest  2,402  in Emerging Markets E on May 3, 2025 and sell it today you would earn a total of  282.00  from holding Emerging Markets E or generate 11.74% return on investment over 90 days.

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

Emerging Markets E  vs.  Dfa Selectively Hedged

Emerging Markets E

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Emerging Markets E are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Emerging Markets may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Dfa Selectively Hedged

Risk-Adjusted Performance

Solid

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

Pair Trading with Emerging Markets and Dfa Selectively

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

The idea behind Emerging Markets E and Dfa Selectively Hedged 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.