Correlation Between Kopernik Global and Dfa International

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

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

Diversification Opportunities for Kopernik Global and Dfa International

0.82

Correlation Coefficient

Kopernik Global  Dfa International

Very poor diversification

The 3 months correlation between Kopernik and Dfa is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Kopernik Global All Cap and Dfa International Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa International Small and Kopernik Global 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 Kopernik Global All Cap 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 Small has no effect on the direction of Kopernik Global i.e., Kopernik Global and Dfa International go up and down completely randomly.

Pair Corralation between Kopernik Global and Dfa International

Assuming the 90 days horizon Kopernik Global All Cap is expected to generate 0.71 times more return on investment than Dfa International. However, Kopernik Global All Cap is 1.41 times less risky than Dfa International. It trades about 0.18 of its potential returns per unit of risk. Dfa International Small is currently generating about -0.04 per unit of risk. If you would invest  1,162  in Kopernik Global All Cap on January 26, 2024 and sell it today you would earn a total of  24.00  from holding Kopernik Global All Cap or generate 2.07% return on investment over 90 days.

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

Kopernik Global All Cap  vs.  Dfa International Small

Kopernik Global All

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Kopernik Global All Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Kopernik Global is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dfa International Small

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa International Small are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dfa International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Kopernik Global and Dfa International

The main advantage of trading using opposite Kopernik Global and Dfa International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kopernik Global 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 Kopernik Global All Cap and Dfa International Small 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..