Correlation Between Dimensional Targeted and Xtrackers MSCI
Can any of the company-specific risk be diversified away by investing in both Dimensional Targeted and Xtrackers MSCI 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 Xtrackers MSCI 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 Xtrackers MSCI EAFE, you can compare the effects of market volatilities on Dimensional Targeted and Xtrackers MSCI 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 Xtrackers MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Targeted and Xtrackers MSCI.
Diversification Opportunities for Dimensional Targeted and Xtrackers MSCI
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dimensional and Xtrackers is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Targeted Value and Xtrackers MSCI EAFE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers MSCI EAFE 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 Xtrackers MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers MSCI EAFE has no effect on the direction of Dimensional Targeted i.e., Dimensional Targeted and Xtrackers MSCI go up and down completely randomly.
Pair Corralation between Dimensional Targeted and Xtrackers MSCI
Given the investment horizon of 90 days Dimensional Targeted Value is expected to generate 1.61 times more return on investment than Xtrackers MSCI. However, Dimensional Targeted is 1.61 times more volatile than Xtrackers MSCI EAFE. It trades about 0.06 of its potential returns per unit of risk. Xtrackers MSCI EAFE is currently generating about 0.06 per unit of risk. If you would invest 4,366 in Dimensional Targeted Value on August 28, 2024 and sell it today you would earn a total of 1,738 from holding Dimensional Targeted Value or generate 39.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Targeted Value vs. Xtrackers MSCI EAFE
Performance |
| Timeline |
| Dimensional Targeted |
| Xtrackers MSCI EAFE |
Dimensional Targeted and Xtrackers MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Targeted and Xtrackers MSCI
The main advantage of trading using opposite Dimensional Targeted and Xtrackers MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Targeted position performs unexpectedly, Xtrackers MSCI 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 Xtrackers MSCI will offset losses from the drop in Xtrackers MSCI'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 |
| Xtrackers MSCI vs. Fidelity International High | Xtrackers MSCI vs. Global X MSCI | Xtrackers MSCI vs. Xtrackers USD High | Xtrackers MSCI vs. First Trust Dow |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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