Correlation Between Dfa International and Us Micro
Can any of the company-specific risk be diversified away by investing in both Dfa International and Us Micro 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 International and Us Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa International Small and Us Micro Cap, you can compare the effects of market volatilities on Dfa International and Us Micro 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 International with a short position of Us Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa International and Us Micro.
Diversification Opportunities for Dfa International and Us Micro
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dfa and DFSCX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dfa International Small and Us Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Micro Cap and Dfa International 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 Small are associated (or correlated) with Us Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Micro Cap has no effect on the direction of Dfa International i.e., Dfa International and Us Micro go up and down completely randomly.
Pair Corralation between Dfa International and Us Micro
Assuming the 90 days horizon Dfa International Small is expected to generate 0.57 times more return on investment than Us Micro. However, Dfa International Small is 1.75 times less risky than Us Micro. It trades about 0.38 of its potential returns per unit of risk. Us Micro Cap is currently generating about 0.21 per unit of risk. If you would invest 2,456 in Dfa International Small on April 25, 2025 and sell it today you would earn a total of 399.00 from holding Dfa International Small or generate 16.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa International Small vs. Us Micro Cap
Performance |
| Timeline |
| Dfa International Small |
| Us Micro Cap |
Dfa International and Us Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa International and Us Micro
The main advantage of trading using opposite Dfa International and Us Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa International position performs unexpectedly, Us Micro 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 Us Micro will offset losses from the drop in Us Micro's long position.| Dfa International vs. Dfa International Value | Dfa International vs. International Small Pany | Dfa International vs. Us Large Cap | Dfa International vs. Us Small Cap |
| Us Micro vs. Us Small Cap | Us Micro vs. International Small Pany | Us Micro vs. Dfa International Small | Us Micro vs. Us Large Cap |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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