Correlation Between 2023 ETF and Dimensional International
Can any of the company-specific risk be diversified away by investing in both 2023 ETF and Dimensional International 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 2023 ETF and Dimensional International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2023 ETF Series and Dimensional International High, you can compare the effects of market volatilities on 2023 ETF and Dimensional International 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 2023 ETF with a short position of Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2023 ETF and Dimensional International.
Diversification Opportunities for 2023 ETF and Dimensional International
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between 2023 and Dimensional is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding 2023 ETF Series and Dimensional International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International and 2023 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 2023 ETF Series are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of 2023 ETF i.e., 2023 ETF and Dimensional International go up and down completely randomly.
Pair Corralation between 2023 ETF and Dimensional International
Given the investment horizon of 90 days 2023 ETF Series is expected to under-perform the Dimensional International. But the etf apears to be less risky and, when comparing its historical volatility, 2023 ETF Series is 1.11 times less risky than Dimensional International. The etf trades about -0.13 of its potential returns per unit of risk. The Dimensional International High is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,613 in Dimensional International High on September 1, 2024 and sell it today you would earn a total of 9.00 from holding Dimensional International High or generate 0.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
2023 ETF Series vs. Dimensional International High
Performance |
| Timeline |
| 2023 ETF Series |
| Dimensional International |
2023 ETF and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2023 ETF and Dimensional International
The main advantage of trading using opposite 2023 ETF and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2023 ETF position performs unexpectedly, Dimensional International 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 International will offset losses from the drop in Dimensional International's long position.| 2023 ETF vs. Schwab Fundamental Small | 2023 ETF vs. Schwab Fundamental Large | 2023 ETF vs. Schwab Fundamental International | 2023 ETF vs. Schwab Fundamental Emerging |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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