Correlation Between Dfa Mn and Us Small
Can any of the company-specific risk be diversified away by investing in both Dfa Mn and Us Small 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 Us Small 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 Us Small Cap, you can compare the effects of market volatilities on Dfa Mn and Us Small 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 Us Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Mn and Us Small.
Diversification Opportunities for Dfa Mn and Us Small
Almost no diversification
The 3 months correlation between Dfa and DFSVX is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Mn Municipal and Us Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Small Cap 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 Us Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Small Cap has no effect on the direction of Dfa Mn i.e., Dfa Mn and Us Small go up and down completely randomly.
Pair Corralation between Dfa Mn and Us Small
Assuming the 90 days horizon Dfa Mn is expected to generate 11.58 times less return on investment than Us Small. But when comparing it to its historical volatility, Dfa Mn Municipal is 30.54 times less risky than Us Small. It trades about 0.49 of its potential returns per unit of risk. Us Small Cap is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 4,212 in Us Small Cap on May 1, 2025 and sell it today you would earn a total of 616.00 from holding Us Small Cap or generate 14.62% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dfa Mn Municipal vs. Us Small Cap
Performance |
Timeline |
Dfa Mn Municipal |
Us Small Cap |
Dfa Mn and Us Small Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dfa Mn and Us Small
The main advantage of trading using opposite Dfa Mn and Us Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Mn position performs unexpectedly, Us Small 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 Us Small will offset losses from the drop in Us Small's long position.Dfa Mn vs. Lord Abbett Short | Dfa Mn vs. Jpmorgan High Yield | Dfa Mn vs. Gmo High Yield | Dfa Mn vs. Muzinich High Yield |
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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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.
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