Correlation Between DFA INTERNATIONAL and Akros Monthly

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Can any of the company-specific risk be diversified away by investing in both DFA INTERNATIONAL and Akros Monthly 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 Akros Monthly into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DFA INTERNATIONAL SMALL and Akros Monthly Payout, you can compare the effects of market volatilities on DFA INTERNATIONAL and Akros Monthly 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 Akros Monthly. Check out your portfolio center. Please also check ongoing floating volatility patterns of DFA INTERNATIONAL and Akros Monthly.

Diversification Opportunities for DFA INTERNATIONAL and Akros Monthly

0.91
  Correlation Coefficient

Almost no diversification

The 3 months correlation between DISVX and Akros is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding DFA INTERNATIONAL SMALL and Akros Monthly Payout in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akros Monthly Payout 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 SMALL are associated (or correlated) with Akros Monthly. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akros Monthly Payout has no effect on the direction of DFA INTERNATIONAL i.e., DFA INTERNATIONAL and Akros Monthly go up and down completely randomly.

Pair Corralation between DFA INTERNATIONAL and Akros Monthly

Assuming the 90 days horizon DFA INTERNATIONAL SMALL is expected to generate 1.6 times more return on investment than Akros Monthly. However, DFA INTERNATIONAL is 1.6 times more volatile than Akros Monthly Payout. It trades about 0.02 of its potential returns per unit of risk. Akros Monthly Payout is currently generating about 0.01 per unit of risk. If you would invest  1,893  in DFA INTERNATIONAL SMALL on November 4, 2022 and sell it today you would earn a total of  145.00  from holding DFA INTERNATIONAL SMALL or generate 7.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy37.63%
ValuesDaily Returns

DFA INTERNATIONAL SMALL  vs.  Akros Monthly Payout

 Performance (%) 
       Timeline  
DFA INTERNATIONAL SMALL 
DISVX Performance
19 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in DFA INTERNATIONAL SMALL are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, DFA INTERNATIONAL showed solid returns over the last few months and may actually be approaching a breakup point.

DISVX Price Channel

Akros Monthly Payout 
Akros Performance
17 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Akros Monthly Payout are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Akros Monthly may actually be approaching a critical reversion point that can send shares even higher in March 2023.

Akros Price Channel

DFA INTERNATIONAL and Akros Monthly Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with DFA INTERNATIONAL and Akros Monthly

The main advantage of trading using opposite DFA INTERNATIONAL and Akros Monthly positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DFA INTERNATIONAL position performs unexpectedly, Akros Monthly 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 Akros Monthly will offset losses from the drop in Akros Monthly's long position.
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The idea behind DFA INTERNATIONAL SMALL and Akros Monthly Payout 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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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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