Correlation Between Dimensional Core and Roundhill ETF
Can any of the company-specific risk be diversified away by investing in both Dimensional Core and Roundhill 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 Roundhill 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 Roundhill ETF Trust, you can compare the effects of market volatilities on Dimensional Core and Roundhill 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 Roundhill ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Core and Roundhill ETF.
Diversification Opportunities for Dimensional Core and Roundhill ETF
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dimensional and Roundhill is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Core Equity and Roundhill ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill 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 Roundhill ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill ETF Trust has no effect on the direction of Dimensional Core i.e., Dimensional Core and Roundhill ETF go up and down completely randomly.
Pair Corralation between Dimensional Core and Roundhill ETF
Given the investment horizon of 90 days Dimensional Core Equity is expected to generate 1.35 times more return on investment than Roundhill ETF. However, Dimensional Core is 1.35 times more volatile than Roundhill ETF Trust. It trades about 0.37 of its potential returns per unit of risk. Roundhill ETF Trust is currently generating about 0.35 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 | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dimensional Core Equity vs. Roundhill ETF Trust
Performance |
| Timeline |
| Dimensional Core Equity |
| Roundhill ETF Trust |
Dimensional Core and Roundhill ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Core and Roundhill ETF
The main advantage of trading using opposite Dimensional Core and Roundhill ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Core position performs unexpectedly, Roundhill 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 Roundhill ETF will offset losses from the drop in Roundhill 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 |
| Roundhill ETF vs. Vanguard Total Stock | Roundhill ETF vs. SPDR SP 500 | Roundhill ETF vs. iShares Core SP | Roundhill 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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