Correlation Between Dimensional Core and Vanguard International
Can any of the company-specific risk be diversified away by investing in both Dimensional Core and Vanguard 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 Dimensional Core and Vanguard International 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 Vanguard International High, you can compare the effects of market volatilities on Dimensional Core and Vanguard 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 Dimensional Core with a short position of Vanguard International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Core and Vanguard International.
Diversification Opportunities for Dimensional Core and Vanguard International
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dimensional and Vanguard is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Core Equity and Vanguard International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard International 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 Vanguard International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard International has no effect on the direction of Dimensional Core i.e., Dimensional Core and Vanguard International go up and down completely randomly.
Pair Corralation between Dimensional Core and Vanguard International
Given the investment horizon of 90 days Dimensional Core Equity is expected to generate 1.03 times more return on investment than Vanguard International. However, Dimensional Core is 1.03 times more volatile than Vanguard International High. It trades about 0.12 of its potential returns per unit of risk. Vanguard International High is currently generating about 0.07 per unit of risk. If you would invest 2,548 in Dimensional Core Equity on August 27, 2024 and sell it today you would earn a total of 1,058 from holding Dimensional Core Equity or generate 41.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Core Equity vs. Vanguard International High
Performance |
| Timeline |
| Dimensional Core Equity |
| Vanguard International |
Dimensional Core and Vanguard International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Core and Vanguard International
The main advantage of trading using opposite Dimensional Core and Vanguard International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Core position performs unexpectedly, Vanguard 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 Vanguard International will offset losses from the drop in Vanguard International's long position.| Dimensional Core vs. Morningstar Unconstrained Allocation | Dimensional Core vs. High Yield Municipal Fund | Dimensional Core vs. Via Renewables | Dimensional Core vs. Knife River |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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