Correlation Between Dfa Emerging and Dfa Mn
Can any of the company-specific risk be diversified away by investing in both Dfa Emerging and Dfa Mn 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 Emerging and Dfa Mn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa Emerging Markets and Dfa Mn Municipal, you can compare the effects of market volatilities on Dfa Emerging and Dfa Mn 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 Emerging with a short position of Dfa Mn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Emerging and Dfa Mn.
Diversification Opportunities for Dfa Emerging and Dfa Mn
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dfa and Dfa is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Emerging Markets and Dfa Mn Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Mn Municipal and Dfa Emerging 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 Emerging Markets are associated (or correlated) with Dfa Mn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Mn Municipal has no effect on the direction of Dfa Emerging i.e., Dfa Emerging and Dfa Mn go up and down completely randomly.
Pair Corralation between Dfa Emerging and Dfa Mn
Assuming the 90 days horizon Dfa Emerging Markets is expected to generate 12.11 times more return on investment than Dfa Mn. However, Dfa Emerging is 12.11 times more volatile than Dfa Mn Municipal. It trades about 0.08 of its potential returns per unit of risk. Dfa Mn Municipal is currently generating about 0.15 per unit of risk. If you would invest 1,002 in Dfa Emerging Markets on March 20, 2025 and sell it today you would earn a total of 93.00 from holding Dfa Emerging Markets or generate 9.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.18% |
| Values | Daily Returns |
Dfa Emerging Markets vs. Dfa Mn Municipal
Performance |
| Timeline |
| Dfa Emerging Markets |
| Dfa Mn Municipal |
Dfa Emerging and Dfa Mn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Emerging and Dfa Mn
The main advantage of trading using opposite Dfa Emerging and Dfa Mn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Emerging position performs unexpectedly, Dfa Mn 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 Mn will offset losses from the drop in Dfa Mn's long position.| Dfa Emerging vs. Jpmorgan Global Bond | Dfa Emerging vs. Calvert Global Energy | Dfa Emerging vs. Fmi Global Institutional | Dfa Emerging vs. Barings Global Floating |
| Dfa Mn vs. Nationwide Government Bond | Dfa Mn vs. Short Term Government Fund | Dfa Mn vs. Us Government Securities | Dfa Mn vs. Davis Government Bond |
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 the Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |