Correlation Between Dfa Inflation and Dfa Mn
Can any of the company-specific risk be diversified away by investing in both Dfa Inflation and Dfa Mn 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 Inflation and Dfa Mn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dfa Inflation Protected and Dfa Mn Municipal, you can compare the effects of market volatilities on Dfa Inflation and Dfa Mn 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 Inflation with a short position of Dfa Mn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dfa Inflation and Dfa Mn.
Diversification Opportunities for Dfa Inflation and Dfa Mn
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dfa and Dfa is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Inflation Protected and Dfa Mn Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dfa Mn Municipal and Dfa Inflation 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 Inflation Protected are associated (or correlated) with Dfa Mn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dfa Mn Municipal has no effect on the direction of Dfa Inflation i.e., Dfa Inflation and Dfa Mn go up and down completely randomly.
Pair Corralation between Dfa Inflation and Dfa Mn
Assuming the 90 days horizon Dfa Inflation Protected is expected to generate 5.57 times more return on investment than Dfa Mn. However, Dfa Inflation is 5.57 times more volatile than Dfa Mn Municipal. It trades about 0.08 of its potential returns per unit of risk. Dfa Mn Municipal is currently generating about 0.22 per unit of risk. If you would invest 1,023 in Dfa Inflation Protected on September 1, 2024 and sell it today you would earn a total of 74.00 from holding Dfa Inflation Protected or generate 7.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dfa Inflation Protected vs. Dfa Mn Municipal
Performance |
| Timeline |
| Dfa Inflation Protected |
| Dfa Mn Municipal |
Dfa Inflation and Dfa Mn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dfa Inflation and Dfa Mn
The main advantage of trading using opposite Dfa Inflation and Dfa Mn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dfa Inflation position performs unexpectedly, Dfa Mn 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 Mn will offset losses from the drop in Dfa Mn's long position.| Dfa Inflation vs. International E Equity | Dfa Inflation vs. Dfa Real Estate | Dfa Inflation vs. Emerging Markets E | Dfa Inflation vs. Dfa Five Year Global |
| Dfa Mn vs. Intal High Relative | Dfa Mn vs. Dfa International | Dfa Mn vs. Dfa Inflation Protected | Dfa Mn vs. Dfa International Small |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine |