Correlation Between Dfa International and NYSE Composite

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Dfa International and NYSE Composite 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 International and NYSE Composite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa International Real and NYSE Composite, you can compare the effects of market volatilities on Dfa International and NYSE Composite 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 International with a short position of NYSE Composite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa International and NYSE Composite.

Diversification Opportunities for Dfa International and NYSE Composite

 0.52 Correlation Coefficient

Very weak diversification

The 3 months correlation between Dfa and NYSE is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dfa International Real and NYSE Composite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NYSE Composite and Dfa International 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 International Real are associated (or correlated) with NYSE Composite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NYSE Composite has no effect on the direction of Dfa International i.e., Dfa International and NYSE Composite go up and down completely randomly.

Pair Corralation between Dfa International and NYSE Composite

Assuming the 90 days horizon Dfa International Real is expected to under-perform the NYSE Composite. In addition to that, Dfa International is 1.06 times more volatile than NYSE Composite. It trades about -0.02 of its total potential returns per unit of risk. NYSE Composite is currently generating about 0.03 per unit of volatility. If you would invest  1,560,928  in NYSE Composite on January 22, 2024 and sell it today you would earn a total of  184,949  from holding NYSE Composite or generate 11.85% return on investment over 90 days.
 Time Period 3 Months [change] Direction Moves Together Strength Weak Accuracy 100.0% Values Daily Returns

Dfa International Real  vs.  NYSE Composite

 Performance
 Timeline

Dfa International and NYSE Composite Volatility Contrast

 Predicted Return Density
 Returns

Pair Trading with Dfa International and NYSE Composite

The main advantage of trading using opposite Dfa International and NYSE Composite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa International position performs unexpectedly, NYSE Composite 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 NYSE Composite will offset losses from the drop in NYSE Composite's long position.
 Dfa International vs. International E Equity Dfa International vs. Emerging Markets E Dfa International vs. Us E Equity Dfa International vs. Dfa International Small
The idea behind Dfa International Real and NYSE Composite 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.
 NYSE Composite vs. PennantPark Investment NYSE Composite vs. BBB Foods NYSE Composite vs. ChargePoint Holdings NYSE Composite vs. Levi Strauss Co