Correlation Between Federated Municipal and Dfa California

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

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

Diversification Opportunities for Federated Municipal and Dfa California

-0.54

Correlation Coefficient

Federated Municipal  Dfa California

Excellent diversification

The 3 months correlation between FEDERATED and Dfa is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Federated Municipal High and Dfa California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa California Municipal and Federated 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 Federated Municipal High are associated (or correlated) with Dfa California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa California Municipal has no effect on the direction of Federated Municipal i.e., Federated Municipal and Dfa California go up and down completely randomly.

Pair Corralation between Federated Municipal and Dfa California

If you would invest  783.00  in Federated Municipal High on September 7, 2025 and sell it today you would earn a total of  20.00  from holding Federated Municipal High or generate 2.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Federated Municipal High  vs.  Dfa California Municipal

Federated Municipal High

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Municipal High are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Federated Municipal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dfa California Municipal

Risk-Adjusted Performance

Weakest

Over the last 90 days Dfa California Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Dfa California is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Federated Municipal and Dfa California

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

The idea behind Federated Municipal High and Dfa California Municipal 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.

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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.