Correlation Between Dimensional 2045 and Dfa International

Can any of the company-specific risk be diversified away by investing in both Dimensional 2045 and Dfa International 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 Dimensional 2045 and Dfa International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dimensional 2045 Target and Dfa International, you can compare the effects of market volatilities on Dimensional 2045 and Dfa International 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 Dimensional 2045 with a short position of Dfa International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional 2045 and Dfa International.

Diversification Opportunities for Dimensional 2045 and Dfa International

0.13

Correlation Coefficient

Dimensional 2045  Dfa International

Average diversification

The 3 months correlation between Dimensional and Dfa is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional 2045 Target and Dfa International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa International and Dimensional 2045 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 Dimensional 2045 Target are associated (or correlated) with Dfa International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa International has no effect on the direction of Dimensional 2045 i.e., Dimensional 2045 and Dfa International go up and down completely randomly.

Pair Corralation between Dimensional 2045 and Dfa International

Assuming the 90 days horizon Dimensional 2045 Target is expected to under-perform the Dfa International. In addition to that, Dimensional 2045 is 1.08 times more volatile than Dfa International. It trades about -0.24 of its total potential returns per unit of risk. Dfa International is currently generating about -0.25 per unit of volatility. If you would invest  1,540  in Dfa International on October 1, 2024 and sell it today you would lose (52.00) from holding Dfa International or give up 3.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dimensional 2045 Target  vs.  Dfa International

Dimensional 2045 Target

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional 2045 Target has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Dimensional 2045 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dfa International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dfa International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's primary indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Dimensional 2045 and Dfa International

The main advantage of trading using opposite Dimensional 2045 and Dfa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional 2045 position performs unexpectedly, Dfa International 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 International will offset losses from the drop in Dfa International's long position.

The idea behind Dimensional 2045 Target and Dfa International 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.