Correlation Between Global Real and Dfa Global

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

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

Diversification Opportunities for Global Real and Dfa Global

0.92

Correlation Coefficient

Global Real  Dfa Global

Almost no diversification

The 3 months correlation between Global and Dfa is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Global Real Estate and Dfa Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Global Real and Global Real 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 Global Real Estate are associated (or correlated) with Dfa Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Global Real has no effect on the direction of Global Real i.e., Global Real and Dfa Global go up and down completely randomly.

Pair Corralation between Global Real and Dfa Global

Assuming the 90 days horizon Global Real Estate is expected to under-perform the Dfa Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Global Real Estate is 1.01 times less risky than Dfa Global. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Dfa Global Real is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,124  in Dfa Global Real on September 4, 2024 and sell it today you would earn a total of  9.00  from holding Dfa Global Real or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Global Real Estate  vs.  Dfa Global Real

Global Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dfa Global Real

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Global Real are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dfa Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Global Real and Dfa Global

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

The idea behind Global Real Estate and Dfa Global Real 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.