Correlation Between Dfa Municipal and Dfa Mn
Can any of the company-specific risk be diversified away by investing in both Dfa Municipal 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 Municipal 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 Municipal Real and Dfa Mn Municipal, you can compare the effects of market volatilities on Dfa Municipal 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 Municipal with a short position of Dfa Mn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Municipal and Dfa Mn.
Diversification Opportunities for Dfa Municipal and Dfa Mn
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dfa and Dfa is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Municipal Real 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 Municipal 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 Municipal Real 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 Municipal i.e., Dfa Municipal and Dfa Mn go up and down completely randomly.
Pair Corralation between Dfa Municipal and Dfa Mn
Assuming the 90 days horizon Dfa Municipal Real is expected to generate 1.25 times more return on investment than Dfa Mn. However, Dfa Municipal is 1.25 times more volatile than Dfa Mn Municipal. It trades about 0.3 of its potential returns per unit of risk. Dfa Mn Municipal is currently generating about 0.3 per unit of risk. If you would invest 1,076 in Dfa Municipal Real on June 3, 2025 and sell it today you would earn a total of 12.00 from holding Dfa Municipal Real or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Municipal Real vs. Dfa Mn Municipal
Performance |
| Timeline |
| Dfa Municipal Real |
| Dfa Mn Municipal |
Dfa Municipal and Dfa Mn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Municipal and Dfa Mn
The main advantage of trading using opposite Dfa Municipal and Dfa Mn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Municipal 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 Municipal vs. John Hancock Municipal | Dfa Municipal vs. Old Westbury Municipal | Dfa Municipal vs. Lord Abbett Intermediate | Dfa Municipal vs. Gurtin California Muni |
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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 the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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