Correlation Between Dfa Targeted and Dfa Emerging
Can any of the company-specific risk be diversified away by investing in both Dfa Targeted and Dfa Emerging 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 Targeted and Dfa Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa Targeted Credit and Dfa Emerging Markets, you can compare the effects of market volatilities on Dfa Targeted and Dfa Emerging 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 Targeted with a short position of Dfa Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Targeted and Dfa Emerging.
Diversification Opportunities for Dfa Targeted and Dfa Emerging
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dfa and Dfa is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Targeted Credit and Dfa Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Emerging Markets and Dfa Targeted 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 Targeted Credit are associated (or correlated) with Dfa Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Emerging Markets has no effect on the direction of Dfa Targeted i.e., Dfa Targeted and Dfa Emerging go up and down completely randomly.
Pair Corralation between Dfa Targeted and Dfa Emerging
Assuming the 90 days horizon Dfa Targeted is expected to generate 9.31 times less return on investment than Dfa Emerging. But when comparing it to its historical volatility, Dfa Targeted Credit is 10.77 times less risky than Dfa Emerging. It trades about 0.45 of its potential returns per unit of risk. Dfa Emerging Markets is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 1,419 in Dfa Emerging Markets on April 21, 2025 and sell it today you would earn a total of 269.00 from holding Dfa Emerging Markets or generate 18.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Targeted Credit vs. Dfa Emerging Markets
Performance |
| Timeline |
| Dfa Targeted Credit |
| Dfa Emerging Markets |
Dfa Targeted and Dfa Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Targeted and Dfa Emerging
The main advantage of trading using opposite Dfa Targeted and Dfa Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Targeted position performs unexpectedly, Dfa Emerging 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 Emerging will offset losses from the drop in Dfa Emerging's long position.| Dfa Targeted vs. Global Real Estate | Dfa Targeted vs. Sterling Capital Stratton | Dfa Targeted vs. Guggenheim Risk Managed | Dfa Targeted vs. Tiaa Cref Real Estate |
| Dfa Emerging vs. Intermediate Term Tax Free Bond | Dfa Emerging vs. Multisector Bond Sma | Dfa Emerging vs. Ambrus Core Bond | Dfa Emerging vs. Ab Bond Inflation |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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