Correlation Between Dfa Inflation and Emerging Markets
Can any of the company-specific risk be diversified away by investing in both Dfa Inflation and Emerging Markets 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 Inflation and Emerging Markets into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa Inflation Protected and Emerging Markets Sustainability, you can compare the effects of market volatilities on Dfa Inflation and Emerging Markets 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 Inflation with a short position of Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Inflation and Emerging Markets.
Diversification Opportunities for Dfa Inflation and Emerging Markets
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dfa and Emerging is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Inflation Protected and Emerging Markets Sustainabilit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Sus and Dfa Inflation 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 Inflation Protected are associated (or correlated) with Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Sus has no effect on the direction of Dfa Inflation i.e., Dfa Inflation and Emerging Markets go up and down completely randomly.
Pair Corralation between Dfa Inflation and Emerging Markets
Assuming the 90 days horizon Dfa Inflation is expected to generate 4.8 times less return on investment than Emerging Markets. But when comparing it to its historical volatility, Dfa Inflation Protected is 4.17 times less risky than Emerging Markets. It trades about 0.06 of its potential returns per unit of risk. Emerging Markets Sustainability is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,115 in Emerging Markets Sustainability on August 28, 2025 and sell it today you would earn a total of 37.00 from holding Emerging Markets Sustainability or generate 3.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Inflation Protected vs. Emerging Markets Sustainabilit
Performance |
| Timeline |
| Dfa Inflation Protected |
| Emerging Markets Sus |
Dfa Inflation and Emerging Markets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Inflation and Emerging Markets
The main advantage of trading using opposite Dfa Inflation and Emerging Markets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Inflation position performs unexpectedly, Emerging Markets 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 Emerging Markets will offset losses from the drop in Emerging Markets' long position.| Dfa Inflation vs. Morningstar Defensive Bond | Dfa Inflation vs. Alliancebernstein National Municipalome | Dfa Inflation vs. Flexible Bond Portfolio | Dfa Inflation vs. Maryland Tax Free Bond |
| Emerging Markets vs. Global Resources Fund | Emerging Markets vs. Gmo Resources | Emerging Markets vs. Icon Natural Resources | Emerging Markets vs. Gamco Natural Resources |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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