Correlation Between Dfa - and Dfa Us
Can any of the company-specific risk be diversified away by investing in both Dfa - and Dfa Us 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 - and Dfa Us into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa International and Dfa Sustainability Targeted, you can compare the effects of market volatilities on Dfa - and Dfa Us 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 - with a short position of Dfa Us. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa - and Dfa Us.
Diversification Opportunities for Dfa - and Dfa Us
Poor diversification
The 3 months correlation between Dfa and Dfa is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dfa International and Dfa Sustainability Targeted in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Sustainability and Dfa - 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 International are associated (or correlated) with Dfa Us. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Sustainability has no effect on the direction of Dfa - i.e., Dfa - and Dfa Us go up and down completely randomly.
Pair Corralation between Dfa - and Dfa Us
Assuming the 90 days horizon Dfa - is expected to generate 1.71 times less return on investment than Dfa Us. But when comparing it to its historical volatility, Dfa International is 1.84 times less risky than Dfa Us. It trades about 0.22 of its potential returns per unit of risk. Dfa Sustainability Targeted is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,671 in Dfa Sustainability Targeted on April 17, 2025 and sell it today you would earn a total of 279.00 from holding Dfa Sustainability Targeted or generate 16.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa International vs. Dfa Sustainability Targeted
Performance |
| Timeline |
| Dfa International |
| Dfa Sustainability |
Dfa - and Dfa Us Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa - and Dfa Us
The main advantage of trading using opposite Dfa - and Dfa Us positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa - position performs unexpectedly, Dfa Us 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 Us will offset losses from the drop in Dfa Us' long position.The idea behind Dfa International and Dfa Sustainability Targeted 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.| Dfa Us vs. Wcm Focused Emerging | Dfa Us vs. Nasdaq 100 2x Strategy | Dfa Us vs. Oberweis Emerging Growth | Dfa Us vs. Franklin Emerging Market |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |