Correlation Between Dimensional Core and VanEck ETF
Can any of the company-specific risk be diversified away by investing in both Dimensional Core and VanEck 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 Dimensional Core and VanEck ETF 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 VanEck ETF Trust, you can compare the effects of market volatilities on Dimensional Core and VanEck 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 Dimensional Core with a short position of VanEck ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Core and VanEck ETF.
Diversification Opportunities for Dimensional Core and VanEck ETF
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dimensional and VanEck is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Core Equity and VanEck ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck ETF Trust 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 VanEck ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck ETF Trust has no effect on the direction of Dimensional Core i.e., Dimensional Core and VanEck ETF go up and down completely randomly.
Pair Corralation between Dimensional Core and VanEck ETF
Given the investment horizon of 90 days Dimensional Core Equity is expected to generate 1.28 times more return on investment than VanEck ETF. However, Dimensional Core is 1.28 times more volatile than VanEck ETF Trust. It trades about -0.11 of its potential returns per unit of risk. VanEck ETF Trust is currently generating about -0.28 per unit of risk. If you would invest 3,560 in Dimensional Core Equity on November 28, 2024 and sell it today you would lose (60.00) from holding Dimensional Core Equity or give up 1.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Core Equity vs. VanEck ETF Trust
Performance |
| Timeline |
| Dimensional Core Equity |
| VanEck ETF Trust |
Dimensional Core and VanEck ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Core and VanEck ETF
The main advantage of trading using opposite Dimensional Core and VanEck ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Core position performs unexpectedly, VanEck 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 VanEck ETF will offset losses from the drop in VanEck ETF'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 |
| VanEck ETF vs. VanEck Morningstar International | VanEck ETF vs. VanEck Vectors ETF | VanEck ETF vs. BlackRock Carbon Transition | VanEck ETF vs. VanEck Morningstar Wide |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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