Correlation Between Dimensional Core and 2023 ETF
Can any of the company-specific risk be diversified away by investing in both Dimensional Core and 2023 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 2023 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 The 2023 ETF, you can compare the effects of market volatilities on Dimensional Core and 2023 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 2023 ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Core and 2023 ETF.
Diversification Opportunities for Dimensional Core and 2023 ETF
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dimensional and 2023 is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Core Equity and The 2023 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2023 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 2023 ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2023 ETF has no effect on the direction of Dimensional Core i.e., Dimensional Core and 2023 ETF go up and down completely randomly.
Pair Corralation between Dimensional Core and 2023 ETF
Given the investment horizon of 90 days Dimensional Core Equity is expected to generate 1.24 times more return on investment than 2023 ETF. However, Dimensional Core is 1.24 times more volatile than The 2023 ETF. It trades about 0.37 of its potential returns per unit of risk. The 2023 ETF is currently generating about 0.27 per unit of risk. If you would invest 3,401 in Dimensional Core Equity on September 1, 2024 and sell it today you would earn a total of 244.00 from holding Dimensional Core Equity or generate 7.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dimensional Core Equity vs. The 2023 ETF
Performance |
| Timeline |
| Dimensional Core Equity |
| 2023 ETF |
Dimensional Core and 2023 ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Core and 2023 ETF
The main advantage of trading using opposite Dimensional Core and 2023 ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Core position performs unexpectedly, 2023 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 2023 ETF will offset losses from the drop in 2023 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 |
| 2023 ETF vs. Vanguard Total Stock | 2023 ETF vs. SPDR SP 500 | 2023 ETF vs. iShares Core SP | 2023 ETF 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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