Correlation Between Mid-cap 15x and Dfa International

Can any of the company-specific risk be diversified away by investing in both Mid-cap 15x and Dfa International 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 Mid-cap 15x and Dfa International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap 15x Strategy and Dfa International Real, you can compare the effects of market volatilities on Mid-cap 15x and Dfa International 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 Mid-cap 15x with a short position of Dfa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap 15x and Dfa International.

Diversification Opportunities for Mid-cap 15x and Dfa International

0.8

Correlation Coefficient

Mid-cap 15x  Dfa International

Very poor diversification

The 3 months correlation between Mid-cap and Dfa is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Dfa International Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa International Real and Mid-cap 15x 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 Mid Cap 15x Strategy are associated (or correlated) with Dfa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa International Real has no effect on the direction of Mid-cap 15x i.e., Mid-cap 15x and Dfa International go up and down completely randomly.

Pair Corralation between Mid-cap 15x and Dfa International

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 2.31 times more return on investment than Dfa International. However, Mid-cap 15x is 2.31 times more volatile than Dfa International Real. It trades about 0.19 of its potential returns per unit of risk. Dfa International Real is currently generating about 0.16 per unit of risk. If you would invest  11,366  in Mid Cap 15x Strategy on May 1, 2025 and sell it today you would earn a total of  2,043  from holding Mid Cap 15x Strategy or generate 17.97% return on investment over 90 days.

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

Mid Cap 15x Strategy  vs.  Dfa International Real

Mid Cap 15x

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap 15x Strategy are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical indicators, Mid-cap 15x showed solid returns over the last few months and may actually be approaching a breakup point.

Dfa International Real

Risk-Adjusted Performance

Good

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

Pair Trading with Mid-cap 15x and Dfa International

The main advantage of trading using opposite Mid-cap 15x and Dfa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap 15x position performs unexpectedly, Dfa International 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 International will offset losses from the drop in Dfa International's long position.

The idea behind Mid Cap 15x Strategy and Dfa International 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.