Correlation Between Dimensional World and AB Active
Can any of the company-specific risk be diversified away by investing in both Dimensional World and AB Active 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 AB Active 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 AB Active ETFs,, you can compare the effects of market volatilities on Dimensional World and AB Active 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 AB Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional World and AB Active.
Diversification Opportunities for Dimensional World and AB Active
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dimensional and ILOW is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional World ex and AB Active ETFs, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AB Active ETFs, 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 AB Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AB Active ETFs, has no effect on the direction of Dimensional World i.e., Dimensional World and AB Active go up and down completely randomly.
Pair Corralation between Dimensional World and AB Active
Given the investment horizon of 90 days Dimensional World is expected to generate 2.2 times less return on investment than AB Active. In addition to that, Dimensional World is 1.1 times more volatile than AB Active ETFs,. It trades about 0.01 of its total potential returns per unit of risk. AB Active ETFs, is currently generating about 0.02 per unit of volatility. If you would invest 3,500 in AB Active ETFs, on September 1, 2024 and sell it today you would earn a total of 52.00 from holding AB Active ETFs, or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 79.37% |
| Values | Daily Returns |
Dimensional World ex vs. AB Active ETFs,
Performance |
| Timeline |
| Dimensional World |
| AB Active ETFs, |
Dimensional World and AB Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional World and AB Active
The main advantage of trading using opposite Dimensional World and AB Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional World position performs unexpectedly, AB Active 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 AB Active will offset losses from the drop in AB Active's long position.| Dimensional World vs. Dimensional Core Equity | Dimensional World vs. Dimensional Targeted Value | Dimensional World vs. Dimensional International Value | Dimensional World vs. Dimensional Small Cap |
| AB Active vs. iShares ESG Aggregate | AB Active vs. SPDR MSCI Emerging | AB Active vs. Aquagold International | AB Active vs. Thrivent High Yield |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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