Correlation Between Dfa Emerging and Dfa One-year
Can any of the company-specific risk be diversified away by investing in both Dfa Emerging and Dfa One-year 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 Emerging and Dfa One-year into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa Emerging Markets and Dfa One Year Fixed, you can compare the effects of market volatilities on Dfa Emerging and Dfa One-year 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 Emerging with a short position of Dfa One-year. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Emerging and Dfa One-year.
Diversification Opportunities for Dfa Emerging and Dfa One-year
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dfa and Dfa is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Emerging Markets and Dfa One Year Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa One Year and Dfa Emerging 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 Emerging Markets are associated (or correlated) with Dfa One-year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa One Year has no effect on the direction of Dfa Emerging i.e., Dfa Emerging and Dfa One-year go up and down completely randomly.
Pair Corralation between Dfa Emerging and Dfa One-year
Assuming the 90 days horizon Dfa Emerging Markets is expected to generate 17.0 times more return on investment than Dfa One-year. However, Dfa Emerging is 17.0 times more volatile than Dfa One Year Fixed. It trades about 0.22 of its potential returns per unit of risk. Dfa One Year Fixed is currently generating about 0.4 per unit of risk. If you would invest 1,567 in Dfa Emerging Markets on May 17, 2025 and sell it today you would earn a total of 149.00 from holding Dfa Emerging Markets or generate 9.51% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 98.39% |
Values | Daily Returns |
Dfa Emerging Markets vs. Dfa One Year Fixed
Performance |
Timeline |
Dfa Emerging Markets |
Dfa One Year |
Dfa Emerging and Dfa One-year Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dfa Emerging and Dfa One-year
The main advantage of trading using opposite Dfa Emerging and Dfa One-year positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Emerging position performs unexpectedly, Dfa One-year 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 One-year will offset losses from the drop in Dfa One-year's long position.Dfa Emerging vs. Advent Claymore Convertible | Dfa Emerging vs. Calamos Dynamic Convertible | Dfa Emerging vs. Absolute Convertible Arbitrage | Dfa Emerging vs. Gabelli Convertible And |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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