Correlation Between Dimensional World and Dimensional Core
Can any of the company-specific risk be diversified away by investing in both Dimensional World and Dimensional Core 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 World and Dimensional Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional World ex and Dimensional Core Equity, you can compare the effects of market volatilities on Dimensional World and Dimensional Core 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 World with a short position of Dimensional Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional World and Dimensional Core.
Diversification Opportunities for Dimensional World and Dimensional Core
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dimensional and Dimensional is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional World ex and Dimensional Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Core Equity and Dimensional World 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 World ex are associated (or correlated) with Dimensional Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Core Equity has no effect on the direction of Dimensional World i.e., Dimensional World and Dimensional Core go up and down completely randomly.
Pair Corralation between Dimensional World and Dimensional Core
Given the investment horizon of 90 days Dimensional World ex is expected to under-perform the Dimensional Core. But the etf apears to be less risky and, when comparing its historical volatility, Dimensional World ex is 1.11 times less risky than Dimensional Core. The etf trades about -0.1 of its potential returns per unit of risk. The Dimensional Core Equity is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 4,020 in Dimensional Core Equity on August 30, 2024 and sell it today you would earn a total of 161.00 from holding Dimensional Core Equity or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional World ex vs. Dimensional Core Equity
Performance |
| Timeline |
| Dimensional World |
| Dimensional Core Equity |
Dimensional World and Dimensional Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional World and Dimensional Core
The main advantage of trading using opposite Dimensional World and Dimensional Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional World position performs unexpectedly, Dimensional Core 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 Core will offset losses from the drop in Dimensional Core's long position.| Dimensional World vs. ABIVAX Socit Anonyme | Dimensional World vs. HUMANA INC | Dimensional World vs. SCOR PK | Dimensional World vs. Aquagold International |
| Dimensional Core vs. Dimensional International Core | Dimensional Core vs. Dimensional Emerging Core | Dimensional Core vs. Dimensional Core Equity | Dimensional Core 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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