Correlation Between World Core and Dfa Municipal
Can any of the company-specific risk be diversified away by investing in both World Core and Dfa Municipal 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 World Core and Dfa Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between World Core Equity and Dfa Municipal Real, you can compare the effects of market volatilities on World Core and Dfa Municipal 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 World Core with a short position of Dfa Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of World Core and Dfa Municipal.
Diversification Opportunities for World Core and Dfa Municipal
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between World and Dfa is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding World Core Equity and Dfa Municipal Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Municipal Real and World Core 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 World Core Equity are associated (or correlated) with Dfa Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Municipal Real has no effect on the direction of World Core i.e., World Core and Dfa Municipal go up and down completely randomly.
Pair Corralation between World Core and Dfa Municipal
Assuming the 90 days horizon World Core Equity is expected to generate 8.49 times more return on investment than Dfa Municipal. However, World Core is 8.49 times more volatile than Dfa Municipal Real. It trades about 0.25 of its potential returns per unit of risk. Dfa Municipal Real is currently generating about 0.2 per unit of risk. If you would invest 2,678 in World Core Equity on June 4, 2025 and sell it today you would earn a total of 80.00 from holding World Core Equity or generate 2.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
World Core Equity vs. Dfa Municipal Real
Performance |
| Timeline |
| World Core Equity |
| Dfa Municipal Real |
World Core and Dfa Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with World Core and Dfa Municipal
The main advantage of trading using opposite World Core and Dfa Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if World Core position performs unexpectedly, Dfa Municipal 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 Municipal will offset losses from the drop in Dfa Municipal's long position.| World Core vs. Victory Diversified Stock | World Core vs. Angel Oak Multi Strategy | World Core vs. Ashmore Emerging Markets | World Core vs. Leader Short Term Bond |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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