Correlation Between Dfa Ltip and Dfa Global

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

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

Diversification Opportunities for Dfa Ltip and Dfa Global

0.69

Correlation Coefficient

Dfa Ltip  Dfa Global

Poor diversification

The 3 months correlation between Dfa and Dfa is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Ltip Portfolio and Dfa Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Global Real and Dfa Ltip 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 Ltip Portfolio are associated (or correlated) with Dfa Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Global Real has no effect on the direction of Dfa Ltip i.e., Dfa Ltip and Dfa Global go up and down completely randomly.

Pair Corralation between Dfa Ltip and Dfa Global

Assuming the 90 days horizon Dfa Ltip Portfolio is expected to generate 1.04 times more return on investment than Dfa Global. However, Dfa Ltip is 1.04 times more volatile than Dfa Global Real. It trades about 0.13 of its potential returns per unit of risk. Dfa Global Real is currently generating about 0.05 per unit of risk. If you would invest  518.00  in Dfa Ltip Portfolio on August 1, 2025 and sell it today you would earn a total of  32.00  from holding Dfa Ltip Portfolio or generate 6.18% return on investment over 90 days.

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

Dfa Ltip Portfolio  vs.  Dfa Global Real

Dfa Ltip Portfolio

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Ltip Portfolio are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Dfa Ltip is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dfa Global Real

Risk-Adjusted Performance

Soft

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Global Real are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dfa Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dfa Ltip and Dfa Global

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

The idea behind Dfa Ltip Portfolio and Dfa Global Real 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.