Correlation Between Stadion Tactical and Dfa Large

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

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

Diversification Opportunities for Stadion Tactical and Dfa Large

0.95

Correlation Coefficient

Stadion Tactical  Dfa Large

Almost no diversification

The 3 months correlation between Stadion and Dfa is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Stadion Tactical Growth and Dfa Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Large and Stadion Tactical 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 Stadion Tactical Growth are associated (or correlated) with Dfa Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Large has no effect on the direction of Stadion Tactical i.e., Stadion Tactical and Dfa Large go up and down completely randomly.

Pair Corralation between Stadion Tactical and Dfa Large

Assuming the 90 days horizon Stadion Tactical Growth is expected to under-perform the Dfa Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Stadion Tactical Growth is 1.03 times less risky than Dfa Large. The mutual fund trades about -0.25 of its potential returns per unit of risk. The Dfa Large is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  3,964  in Dfa Large on September 24, 2024 and sell it today you would lose (93.00) from holding Dfa Large or give up 2.35% of portfolio value over 90 days.

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

Stadion Tactical Growth  vs.  Dfa Large

Stadion Tactical Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dfa Large

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Large are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Dfa Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Stadion Tactical and Dfa Large

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

The idea behind Stadion Tactical Growth and Dfa Large 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.