Correlation Between IShares ETF and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both IShares ETF and Dimensional ETF 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 IShares ETF and Dimensional ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares ETF Trust and Dimensional ETF Trust, you can compare the effects of market volatilities on IShares ETF and Dimensional ETF 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 IShares ETF with a short position of Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares ETF and Dimensional ETF.
Diversification Opportunities for IShares ETF and Dimensional ETF
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and Dimensional is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding iShares ETF Trust and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust and IShares ETF 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 iShares ETF Trust are associated (or correlated) with Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of IShares ETF i.e., IShares ETF and Dimensional ETF go up and down completely randomly.
Pair Corralation between IShares ETF and Dimensional ETF
Given the investment horizon of 90 days iShares ETF Trust is expected to generate 0.83 times more return on investment than Dimensional ETF. However, iShares ETF Trust is 1.2 times less risky than Dimensional ETF. It trades about 0.07 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.06 per unit of risk. If you would invest 2,389 in iShares ETF Trust on September 1, 2024 and sell it today you would earn a total of 89.00 from holding iShares ETF Trust or generate 3.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.47% |
| Values | Daily Returns |
iShares ETF Trust vs. Dimensional ETF Trust
Performance |
| Timeline |
| iShares ETF Trust |
| Dimensional ETF Trust |
IShares ETF and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares ETF and Dimensional ETF
The main advantage of trading using opposite IShares ETF and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares ETF position performs unexpectedly, Dimensional ETF 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 Dimensional ETF will offset losses from the drop in Dimensional ETF's long position.| IShares ETF vs. Dimensional ETF Trust | IShares ETF vs. JPMorgan Inflation Managed | IShares ETF vs. Goldman Sachs ETF | IShares ETF vs. Dimensional ETF Trust |
| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Core Equity |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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