Correlation Between Dimensional ETF and IShares Core
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and IShares 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 ETF and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional ETF Trust and iShares Core Aggregate, you can compare the effects of market volatilities on Dimensional ETF and IShares 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 ETF with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and IShares Core.
Diversification Opportunities for Dimensional ETF and IShares Core
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dimensional and IShares is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and iShares Core Aggregate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Aggregate and Dimensional ETF 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 ETF Trust are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Aggregate has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and IShares Core go up and down completely randomly.
Pair Corralation between Dimensional ETF and IShares Core
Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 1.09 times more return on investment than IShares Core. However, Dimensional ETF is 1.09 times more volatile than iShares Core Aggregate. It trades about 0.04 of its potential returns per unit of risk. iShares Core Aggregate is currently generating about 0.04 per unit of risk. If you would invest 4,117 in Dimensional ETF Trust on October 20, 2024 and sell it today you would earn a total of 10.00 from holding Dimensional ETF Trust or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional ETF Trust vs. iShares Core Aggregate
Performance |
| Timeline |
| Dimensional ETF Trust |
| iShares Core Aggregate |
Dimensional ETF and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and IShares Core
The main advantage of trading using opposite Dimensional ETF and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, IShares 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 IShares Core will offset losses from the drop in IShares Core's long position.| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Core Equity | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Emerging Core |
| IShares Core vs. iShares MSCI EAFE | IShares Core vs. iShares iBoxx Investment | IShares Core vs. iShares TIPS Bond | IShares Core vs. iShares 1 3 Year |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
Other Complementary Tools
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |