Correlation Between Dfa Municipal and Advisory Research

Can any of the company-specific risk be diversified away by investing in both Dfa Municipal and Advisory Research 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 Advisory Research 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 Advisory Research Emerging, you can compare the effects of market volatilities on Dfa Municipal and Advisory Research 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 Advisory Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Municipal and Advisory Research.

Diversification Opportunities for Dfa Municipal and Advisory Research

0.7

Correlation Coefficient

Dfa Municipal  Advisory Research

Poor diversification

The 3 months correlation between Dfa and Advisory is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Municipal Real and Advisory Research Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advisory Research 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 Advisory Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advisory Research has no effect on the direction of Dfa Municipal i.e., Dfa Municipal and Advisory Research go up and down completely randomly.

Pair Corralation between Dfa Municipal and Advisory Research

Assuming the 90 days horizon Dfa Municipal is expected to generate 6.61 times less return on investment than Advisory Research. But when comparing it to its historical volatility, Dfa Municipal Real is 15.42 times less risky than Advisory Research. It trades about 0.34 of its potential returns per unit of risk. Advisory Research Emerging is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,234  in Advisory Research Emerging on June 30, 2025 and sell it today you would earn a total of  91.00  from holding Advisory Research Emerging or generate 7.37% 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.  Advisory Research Emerging

Dfa Municipal Real

Risk-Adjusted Performance

Strong

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

Advisory Research

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Advisory Research Emerging are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak primary indicators, Advisory Research may actually be approaching a critical reversion point that can send shares even higher in October 2025.

Pair Trading with Dfa Municipal and Advisory Research

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

The idea behind Dfa Municipal Real and Advisory Research Emerging 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.