Correlation Between Dimensional Targeted and DWS
Can any of the company-specific risk be diversified away by investing in both Dimensional Targeted and DWS 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 DWS 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 DWS, you can compare the effects of market volatilities on Dimensional Targeted and DWS 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 DWS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Targeted and DWS.
Diversification Opportunities for Dimensional Targeted and DWS
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dimensional and DWS is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Targeted Value and DWS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DWS 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 DWS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DWS has no effect on the direction of Dimensional Targeted i.e., Dimensional Targeted and DWS go up and down completely randomly.
Pair Corralation between Dimensional Targeted and DWS
Given the investment horizon of 90 days Dimensional Targeted Value is expected to generate 1.59 times more return on investment than DWS. However, Dimensional Targeted is 1.59 times more volatile than DWS. It trades about 0.07 of its potential returns per unit of risk. DWS is currently generating about 0.07 per unit of risk. If you would invest 4,494 in Dimensional Targeted Value on August 31, 2024 and sell it today you would earn a total of 1,571 from holding Dimensional Targeted Value or generate 34.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 75.67% |
| Values | Daily Returns |
Dimensional Targeted Value vs. DWS
Performance |
| Timeline |
| Dimensional Targeted |
| DWS |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dimensional Targeted and DWS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Targeted and DWS
The main advantage of trading using opposite Dimensional Targeted and DWS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Targeted position performs unexpectedly, DWS 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 DWS will offset losses from the drop in DWS'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 |
| DWS vs. Xtrackers MSCI EAFE | DWS vs. iShares AsiaPacific Dividend | DWS vs. WBI Power Factor | DWS vs. Global X MSCI |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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