Correlation Between Qs Large and Dfa Emerging

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

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

Diversification Opportunities for Qs Large and Dfa Emerging

0.63

Correlation Coefficient

Qs Large  Dfa Emerging

Poor diversification

The 3 months correlation between LMUSX and Dfa is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Qs Large Cap and Dfa Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Emerging Markets and Qs Large 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 Qs Large Cap are associated (or correlated) with Dfa Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Emerging Markets has no effect on the direction of Qs Large i.e., Qs Large and Dfa Emerging go up and down completely randomly.

Pair Corralation between Qs Large and Dfa Emerging

Assuming the 90 days horizon Qs Large Cap is expected to generate 0.93 times more return on investment than Dfa Emerging. However, Qs Large Cap is 1.08 times less risky than Dfa Emerging. It trades about 0.17 of its potential returns per unit of risk. Dfa Emerging Markets is currently generating about 0.15 per unit of risk. If you would invest  2,578  in Qs Large Cap on July 23, 2025 and sell it today you would earn a total of  187.00  from holding Qs Large Cap or generate 7.25% return on investment over 90 days.

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

Qs Large Cap  vs.  Dfa Emerging Markets

Qs Large Cap

Risk-Adjusted Performance

Good

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

Dfa Emerging Markets

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Emerging Markets are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Dfa Emerging may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Qs Large and Dfa Emerging

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

The idea behind Qs Large Cap and Dfa Emerging Markets 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.