Correlation Between Intermediate-term and Dfa Emerging
Can any of the company-specific risk be diversified away by investing in both Intermediate-term 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 Intermediate-term and Dfa Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Intermediate Term Tax Free Bond and Dfa Emerging Markets, you can compare the effects of market volatilities on Intermediate-term 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 Intermediate-term with a short position of Dfa Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intermediate-term and Dfa Emerging.
Diversification Opportunities for Intermediate-term and Dfa Emerging
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Intermediate-term and Dfa is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Intermediate Term Tax Free Bon 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 Intermediate-term 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 Intermediate Term Tax Free Bond 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 Intermediate-term i.e., Intermediate-term and Dfa Emerging go up and down completely randomly.
Pair Corralation between Intermediate-term and Dfa Emerging
Assuming the 90 days horizon Intermediate-term is expected to generate 6.33 times less return on investment than Dfa Emerging. But when comparing it to its historical volatility, Intermediate Term Tax Free Bond is 6.22 times less risky than Dfa Emerging. It trades about 0.16 of its potential returns per unit of risk. Dfa Emerging Markets is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,685 in Dfa Emerging Markets on June 7, 2025 and sell it today you would earn a total of 30.00 from holding Dfa Emerging Markets or generate 1.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Intermediate Term Tax Free Bon vs. Dfa Emerging Markets
Performance |
| Timeline |
| Intermediate Term Tax |
| Dfa Emerging Markets |
Intermediate-term and Dfa Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Intermediate-term and Dfa Emerging
The main advantage of trading using opposite Intermediate-term and Dfa Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intermediate-term 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.| Intermediate-term vs. Gold And Precious | Intermediate-term vs. First Eagle Gold | Intermediate-term vs. International Investors Gold | Intermediate-term vs. Deutsche Gold Precious |
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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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