Correlation Between Dfa One-year and Us Micro
Can any of the company-specific risk be diversified away by investing in both Dfa One-year 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 One-year 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 One Year Fixed and Us Micro Cap, you can compare the effects of market volatilities on Dfa One-year 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 One-year with a short position of Us Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa One-year and Us Micro.
Diversification Opportunities for Dfa One-year and Us Micro
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dfa and DFSCX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dfa One Year Fixed 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 One-year 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 One Year Fixed 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 One-year i.e., Dfa One-year and Us Micro go up and down completely randomly.
Pair Corralation between Dfa One-year and Us Micro
Assuming the 90 days horizon Dfa One-year is expected to generate 2.3 times less return on investment than Us Micro. But when comparing it to its historical volatility, Dfa One Year Fixed is 35.8 times less risky than Us Micro. It trades about 0.44 of its potential returns per unit of risk. Us Micro Cap is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,847 in Us Micro Cap on May 27, 2025 and sell it today you would earn a total of 224.00 from holding Us Micro Cap or generate 7.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dfa One Year Fixed vs. Us Micro Cap
Performance |
Timeline |
Dfa One Year |
Us Micro Cap |
Dfa One-year and Us Micro Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dfa One-year and Us Micro
The main advantage of trading using opposite Dfa One-year and Us Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa One-year 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.Dfa One-year vs. Blackrock Government Bond | Dfa One-year vs. Goldman Sachs Government | Dfa One-year vs. Payden Government Fund | Dfa One-year vs. Virtus Seix Government |
Us Micro vs. Us Small Cap | Us Micro vs. International Small Pany | Us Micro vs. Dfa International Small | Us Micro vs. Us Large Cap |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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