Correlation Between Dfa Real and Short Term

Can any of the company-specific risk be diversified away by investing in both Dfa Real and Short Term 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 Real and Short Term into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dfa Real Estate and Short Term Municipal Bond, you can compare the effects of market volatilities on Dfa Real and Short Term 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 Real with a short position of Short Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Real and Short Term.

Diversification Opportunities for Dfa Real and Short Term

0.73

Correlation Coefficient

Dfa Real  Short Term

Poor diversification

The 3 months correlation between Dfa and Short is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Real Estate and Short Term Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Municipal and Dfa Real 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 Real Estate are associated (or correlated) with Short Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Municipal has no effect on the direction of Dfa Real i.e., Dfa Real and Short Term go up and down completely randomly.

Pair Corralation between Dfa Real and Short Term

Assuming the 90 days horizon Dfa Real Estate is expected to generate 11.82 times more return on investment than Short Term. However, Dfa Real is 11.82 times more volatile than Short Term Municipal Bond. It trades about 0.09 of its potential returns per unit of risk. Short Term Municipal Bond is currently generating about 0.34 per unit of risk. If you would invest  3,995  in Dfa Real Estate on April 29, 2025 and sell it today you would earn a total of  169.00  from holding Dfa Real Estate or generate 4.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dfa Real Estate  vs.  Short Term Municipal Bond

Dfa Real Estate

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Real Estate are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dfa Real is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Short Term Municipal

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Municipal Bond are ranked lower than 26 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Short Term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dfa Real and Short Term

The main advantage of trading using opposite Dfa Real and Short Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Real position performs unexpectedly, Short Term 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 Short Term will offset losses from the drop in Short Term's long position.

The idea behind Dfa Real Estate and Short Term Municipal Bond pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.