Correlation Between Dfa Mn and Dfa Emerging
Can any of the company-specific risk be diversified away by investing in both Dfa Mn and Dfa Emerging 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 Mn and Dfa Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa Mn Municipal and Dfa Emerging Markets, you can compare the effects of market volatilities on Dfa Mn and Dfa Emerging 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 Mn with a short position of Dfa Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Mn and Dfa Emerging.
Diversification Opportunities for Dfa Mn and Dfa Emerging
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dfa and Dfa is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Mn Municipal and Dfa Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Emerging Markets and Dfa Mn 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 Mn Municipal are associated (or correlated) with Dfa Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Emerging Markets has no effect on the direction of Dfa Mn i.e., Dfa Mn and Dfa Emerging go up and down completely randomly.
Pair Corralation between Dfa Mn and Dfa Emerging
Assuming the 90 days horizon Dfa Mn is expected to generate 10.16 times less return on investment than Dfa Emerging. But when comparing it to its historical volatility, Dfa Mn Municipal is 14.59 times less risky than Dfa Emerging. It trades about 0.3 of its potential returns per unit of risk. Dfa Emerging Markets is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 1,565 in Dfa Emerging Markets on June 1, 2025 and sell it today you would earn a total of 152.00 from holding Dfa Emerging Markets or generate 9.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Dfa Mn Municipal vs. Dfa Emerging Markets
Performance |
| Timeline |
| Dfa Mn Municipal |
| Dfa Emerging Markets |
Dfa Mn and Dfa Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Mn and Dfa Emerging
The main advantage of trading using opposite Dfa Mn and Dfa Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Mn position performs unexpectedly, Dfa Emerging 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 Emerging will offset losses from the drop in Dfa Emerging's long position.| Dfa Mn vs. Mesirow Financial Small | Dfa Mn vs. Prudential Financial Services | Dfa Mn vs. Angel Oak Financial | Dfa Mn vs. Transamerica Financial Life |
| Dfa Emerging vs. L Abbett Growth | Dfa Emerging vs. Tactical Multi Purpose Fund | Dfa Emerging vs. Old Westbury Large | Dfa Emerging vs. Mh Elite Fund |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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