Correlation Between RBC Small and Dfa US

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

Specify exactly 2 symbols:

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

Diversification Opportunities for RBC Small and Dfa US

0.78
  Correlation Coefficient
RBC Small Cap
Dfa US Targeted

Poor diversification

The 3 months correlation between RBVAX and DFTVX is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding RBC Small Cap and Dfa US Targeted in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Dfa US Targeted and RBC Small 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 RBC Small Cap are associated (or correlated) with Dfa US. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa US Targeted has no effect on the direction of RBC Small i.e., RBC Small and Dfa US go up and down completely randomly.

Pair Corralation between RBC Small and Dfa US

Assuming the 90 days horizon RBC Small is expected to generate 1.54 times less return on investment than Dfa US. In addition to that, RBC Small is 1.02 times more volatile than Dfa US Targeted. It trades about 0.21 of its total potential returns per unit of risk. Dfa US Targeted is currently generating about 0.33 per unit of volatility. If you would invest  2,965  in Dfa US Targeted on July 24, 2021 and sell it today you would earn a total of  236.00  from holding Dfa US Targeted or generate 7.96% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.65%
ValuesDaily Returns

RBC Small Cap  vs.  Dfa US Targeted

 Performance (%) 
      Timeline 
RBC Small Cap 
 RBVAX Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in RBC Small Cap are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, RBC Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Dfa US Targeted 
 DFTVX Performance
8 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Dfa US Targeted are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dfa US may actually be approaching a critical reversion point that can send shares even higher in November 2021.

RBC Small and Dfa US Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with RBC Small and Dfa US

The main advantage of trading using opposite RBC Small and Dfa US positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RBC Small position performs unexpectedly, Dfa US 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 US will offset losses from the drop in Dfa US's long position.
The idea behind RBC Small Cap and Dfa US Targeted 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.
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

Other Complementary Tools

Fund Screener
Find activelly-traded funds from around the world traded on over 30 global exchanges
Go
Equity Forecasting
Use basic forecasting models to generate price predictions and determine price momentum
Go
Correlation Analysis
Reduce portfolio risk simply by holding instruments which are not perfectly correlated
Go
Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Go
Financial Widgets
Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets
Go
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Go
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like
Go
Transaction History
View history of all your transactions and understand their impact on performance
Go
Global Correlations
Find global opportunities by holding instruments from different markets
Go
Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Go
Sync Your Broker
Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors.
Go
Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Go
Money Managers
Screen money managers from public funds and ETFs managed around the world
Go