Correlation Between Dimensional Targeted and Dimensional International
Can any of the company-specific risk be diversified away by investing in both Dimensional Targeted and Dimensional 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 Targeted and Dimensional International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional Targeted Value and Dimensional International Core, you can compare the effects of market volatilities on Dimensional Targeted and Dimensional 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 Targeted with a short position of Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Targeted and Dimensional International.
Diversification Opportunities for Dimensional Targeted and Dimensional International
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dimensional and Dimensional is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Targeted Value and Dimensional International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International and Dimensional Targeted 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 Targeted Value are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of Dimensional Targeted i.e., Dimensional Targeted and Dimensional International go up and down completely randomly.
Pair Corralation between Dimensional Targeted and Dimensional International
Given the investment horizon of 90 days Dimensional Targeted Value is expected to generate 1.7 times more return on investment than Dimensional International. However, Dimensional Targeted is 1.7 times more volatile than Dimensional International Core. It trades about 0.12 of its potential returns per unit of risk. Dimensional International Core is currently generating about -0.08 per unit of risk. If you would invest 5,492 in Dimensional Targeted Value on August 28, 2024 and sell it today you would earn a total of 564.00 from holding Dimensional Targeted Value or generate 10.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Targeted Value vs. Dimensional International Core
Performance |
| Timeline |
| Dimensional Targeted |
| Dimensional International |
Dimensional Targeted and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Targeted and Dimensional International
The main advantage of trading using opposite Dimensional Targeted and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Targeted position performs unexpectedly, Dimensional 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 Dimensional International will offset losses from the drop in Dimensional International's long position.| Dimensional Targeted vs. Dimensional Small Cap | Dimensional Targeted vs. Dimensional Core Equity | Dimensional Targeted vs. Dimensional International Value | Dimensional Targeted vs. Dimensional Equity ETF |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stocks Directory Find actively traded stocks across global markets | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity |