Correlation Between Dimensional Targeted and PBDM
Can any of the company-specific risk be diversified away by investing in both Dimensional Targeted and PBDM 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 PBDM 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 PBDM, you can compare the effects of market volatilities on Dimensional Targeted and PBDM 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 PBDM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Targeted and PBDM.
Diversification Opportunities for Dimensional Targeted and PBDM
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dimensional and PBDM is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Targeted Value and PBDM in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PBDM 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 PBDM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PBDM has no effect on the direction of Dimensional Targeted i.e., Dimensional Targeted and PBDM go up and down completely randomly.
Pair Corralation between Dimensional Targeted and PBDM
If you would invest 5,515 in Dimensional Targeted Value on August 25, 2024 and sell it today you would earn a total of 503.00 from holding Dimensional Targeted Value or generate 9.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
Dimensional Targeted Value vs. PBDM
Performance |
| Timeline |
| Dimensional Targeted |
| PBDM |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dimensional Targeted and PBDM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Targeted and PBDM
The main advantage of trading using opposite Dimensional Targeted and PBDM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Targeted position performs unexpectedly, PBDM 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 PBDM will offset losses from the drop in PBDM'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 |
| PBDM vs. Dimensional Core Equity | PBDM vs. Dimensional Emerging Core | PBDM vs. Dimensional Targeted Value | PBDM vs. Dimensional Small Cap |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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