Correlation Between Dimensional Emerging and Macquarie ETF
Can any of the company-specific risk be diversified away by investing in both Dimensional Emerging and Macquarie 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 Emerging and Macquarie ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional Emerging Core and Macquarie ETF Trust, you can compare the effects of market volatilities on Dimensional Emerging and Macquarie 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 Emerging with a short position of Macquarie ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Emerging and Macquarie ETF.
Diversification Opportunities for Dimensional Emerging and Macquarie ETF
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dimensional and Macquarie is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Emerging Core and Macquarie ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Macquarie ETF Trust and Dimensional Emerging 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 Emerging Core are associated (or correlated) with Macquarie ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Macquarie ETF Trust has no effect on the direction of Dimensional Emerging i.e., Dimensional Emerging and Macquarie ETF go up and down completely randomly.
Pair Corralation between Dimensional Emerging and Macquarie ETF
Given the investment horizon of 90 days Dimensional Emerging Core is expected to generate 10.22 times more return on investment than Macquarie ETF. However, Dimensional Emerging is 10.22 times more volatile than Macquarie ETF Trust. It trades about 0.08 of its potential returns per unit of risk. Macquarie ETF Trust is currently generating about 0.17 per unit of risk. If you would invest 2,128 in Dimensional Emerging Core on August 26, 2024 and sell it today you would earn a total of 459.00 from holding Dimensional Emerging Core or generate 21.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.59% |
| Values | Daily Returns |
Dimensional Emerging Core vs. Macquarie ETF Trust
Performance |
| Timeline |
| Dimensional Emerging Core |
| Macquarie ETF Trust |
Dimensional Emerging and Macquarie ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Emerging and Macquarie ETF
The main advantage of trading using opposite Dimensional Emerging and Macquarie ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Emerging position performs unexpectedly, Macquarie 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 Macquarie ETF will offset losses from the drop in Macquarie ETF's long position.The idea behind Dimensional Emerging Core and Macquarie ETF Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Macquarie ETF vs. Dimensional ETF Trust | Macquarie ETF vs. Dimensional ETF Trust | Macquarie ETF vs. Dimensional ETF Trust | Macquarie ETF vs. Dimensional Emerging Core |
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.
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