Correlation Between Dfa Municipal and World Core
Can any of the company-specific risk be diversified away by investing in both Dfa Municipal and World Core 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 World Core 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 World Core Equity, you can compare the effects of market volatilities on Dfa Municipal and World Core 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 World Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Municipal and World Core.
Diversification Opportunities for Dfa Municipal and World Core
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dfa and World is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Municipal Real and World Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Core Equity 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 World Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Core Equity has no effect on the direction of Dfa Municipal i.e., Dfa Municipal and World Core go up and down completely randomly.
Pair Corralation between Dfa Municipal and World Core
Assuming the 90 days horizon Dfa Municipal Real is expected to generate 0.17 times more return on investment than World Core. However, Dfa Municipal Real is 5.8 times less risky than World Core. It trades about 0.15 of its potential returns per unit of risk. World Core Equity is currently generating about -0.05 per unit of risk. If you would invest 1,058 in Dfa Municipal Real on September 25, 2025 and sell it today you would earn a total of 10.00 from holding Dfa Municipal Real or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Municipal Real vs. World Core Equity
Performance |
| Timeline |
| Dfa Municipal Real |
| World Core Equity |
Dfa Municipal and World Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Municipal and World Core
The main advantage of trading using opposite Dfa Municipal and World Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Municipal position performs unexpectedly, World Core 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 World Core will offset losses from the drop in World Core's long position.| Dfa Municipal vs. Intal High Relative | Dfa Municipal vs. Dfa International | Dfa Municipal vs. Dfa Inflation Protected | Dfa Municipal vs. Dfa International Small |
| World Core vs. Intal High Relative | World Core vs. Dfa International | World Core vs. Dfa Inflation Protected | World Core vs. Dfa International Small |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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