Correlation Between Dimensional Core and American Century
Can any of the company-specific risk be diversified away by investing in both Dimensional Core and American Century 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 Dimensional Core and American Century into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional Core Equity and American Century ETF, you can compare the effects of market volatilities on Dimensional Core and American Century 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 Dimensional Core with a short position of American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Core and American Century.
Diversification Opportunities for Dimensional Core and American Century
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dimensional and American is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Core Equity and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF and Dimensional Core 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 Dimensional Core Equity are associated (or correlated) with American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century ETF has no effect on the direction of Dimensional Core i.e., Dimensional Core and American Century go up and down completely randomly.
Pair Corralation between Dimensional Core and American Century
Given the investment horizon of 90 days Dimensional Core Equity is expected to generate 1.02 times more return on investment than American Century. However, Dimensional Core is 1.02 times more volatile than American Century ETF. It trades about 0.13 of its potential returns per unit of risk. American Century ETF is currently generating about 0.13 per unit of risk. If you would invest 3,162 in Dimensional Core Equity on September 1, 2024 and sell it today you would earn a total of 483.00 from holding Dimensional Core Equity or generate 15.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dimensional Core Equity vs. American Century ETF
Performance |
| Timeline |
| Dimensional Core Equity |
| American Century ETF |
Dimensional Core and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Core and American Century
The main advantage of trading using opposite Dimensional Core and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Core position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century's long position.| Dimensional Core vs. Dimensional Targeted Value | Dimensional Core vs. Dimensional World ex | Dimensional Core vs. Dimensional Small Cap | Dimensional Core vs. Dimensional Core Equity |
| American Century vs. Vanguard Total Stock | American Century vs. SPDR SP 500 | American Century vs. iShares Core SP | American Century vs. Vanguard Dividend Appreciation |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
Other Complementary Tools
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |