Correlation Between Dfa Mn and World Ex

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

Diversification Opportunities for Dfa Mn and World Ex

-0.08

Correlation Coefficient

Dfa Mn  World Ex

Good diversification

The 3 months correlation between Dfa and World is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Dfa Mn Municipal and World Ex Val in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Ex Val 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 World Ex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Ex Val has no effect on the direction of Dfa Mn i.e., Dfa Mn and World Ex go up and down completely randomly.

Pair Corralation between Dfa Mn and World Ex

Assuming the 90 days horizon Dfa Mn is expected to generate 15.78 times less return on investment than World Ex. But when comparing it to its historical volatility, Dfa Mn Municipal is 18.15 times less risky than World Ex. It trades about 0.09 of its potential returns per unit of risk. World Ex Val is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,591  in World Ex Val on August 26, 2025 and sell it today you would earn a total of  50.00  from holding World Ex Val or generate 3.14% return on investment over 90 days.

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

Dfa Mn Municipal  vs.  World Ex Val

Dfa Mn Municipal

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Dfa Mn Municipal are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental drivers, Dfa Mn is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

World Ex Val

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in World Ex Val are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, World Ex 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 Mn and World Ex

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

The idea behind Dfa Mn Municipal and World Ex Val 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 Commodity Directory module to find actively traded commodities issued by global exchanges.