Correlation Between Us Micro and Dfa Two-year

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

By analyzing existing cross correlation between Us Micro Cap and Dfa Two Year Global, you can compare the effects of market volatilities on Us Micro and Dfa Two-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 Us Micro with a short position of Dfa Two-year. Check out your portfolio center. Please also check ongoing floating volatility patterns of Us Micro and Dfa Two-year.

Diversification Opportunities for Us Micro and Dfa Two-year

0.84

Correlation Coefficient

Us Micro  Dfa Two-year

Very poor diversification

The 3 months correlation between DFSCX and Dfa is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Us Micro Cap and Dfa Two Year Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Two Year and Us Micro 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 Us Micro Cap are associated (or correlated) with Dfa Two-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 Two Year has no effect on the direction of Us Micro i.e., Us Micro and Dfa Two-year go up and down completely randomly.

Pair Corralation between Us Micro and Dfa Two-year

Assuming the 90 days horizon Us Micro Cap is expected to generate 30.39 times more return on investment than Dfa Two-year. However, Us Micro is 30.39 times more volatile than Dfa Two Year Global. It trades about 0.17 of its potential returns per unit of risk. Dfa Two Year Global is currently generating about 0.46 per unit of risk. If you would invest  2,726  in Us Micro Cap on May 27, 2025 and sell it today you would earn a total of  345.00  from holding Us Micro Cap or generate 12.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Us Micro Cap  vs.  Dfa Two Year Global

Us Micro Cap

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Us Micro Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Us Micro may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Dfa Two Year

Risk-Adjusted Performance

High

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Two Year Global are ranked lower than 35 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dfa Two-year is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Us Micro and Dfa Two-year

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

The idea behind Us Micro Cap and Dfa Two Year Global 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.