Correlation Between Vanguard Total and Dfa Five

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

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

Diversification Opportunities for Vanguard Total and Dfa Five

0.65

Correlation Coefficient

Vanguard Total  Dfa Five

Poor diversification

The 3 months correlation between Vanguard and Dfa is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Total International and Dfa Five Year Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Five Year and Vanguard Total 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 Vanguard Total International are associated (or correlated) with Dfa Five. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Five Year has no effect on the direction of Vanguard Total i.e., Vanguard Total and Dfa Five go up and down completely randomly.

Pair Corralation between Vanguard Total and Dfa Five

Assuming the 90 days horizon Vanguard Total is expected to generate 1.88 times less return on investment than Dfa Five. In addition to that, Vanguard Total is 4.47 times more volatile than Dfa Five Year Global. It trades about 0.05 of its total potential returns per unit of risk. Dfa Five Year Global is currently generating about 0.44 per unit of volatility. If you would invest  1,005  in Dfa Five Year Global on May 4, 2025 and sell it today you would earn a total of  12.00  from holding Dfa Five Year Global or generate 1.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Vanguard Total International  vs.  Dfa Five Year Global

Vanguard Total Inter

Risk-Adjusted Performance

Insignificant

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

Dfa Five Year

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Five Year Global are ranked lower than 34 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Dfa Five is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Vanguard Total and Dfa Five

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

The idea behind Vanguard Total International and Dfa Five 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.