Correlation Between Dimensional ETF and IShares ETF
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and IShares ETF 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 ETF 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 ETF Trust, you can compare the effects of market volatilities on Dimensional ETF and IShares ETF 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 ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and IShares ETF.
Diversification Opportunities for Dimensional ETF and IShares ETF
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and iShares ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ETF Trust 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 ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ETF Trust has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and IShares ETF go up and down completely randomly.
Pair Corralation between Dimensional ETF and IShares ETF
Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 1.45 times more return on investment than IShares ETF. However, Dimensional ETF is 1.45 times more volatile than iShares ETF Trust. It trades about 0.16 of its potential returns per unit of risk. iShares ETF Trust is currently generating about 0.19 per unit of risk. If you would invest 4,180 in Dimensional ETF Trust on September 3, 2024 and sell it today you would earn a total of 52.00 from holding Dimensional ETF Trust or generate 1.24% 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 ETF Trust
Performance |
| Timeline |
| Dimensional ETF Trust |
| iShares ETF Trust |
Dimensional ETF and IShares ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and IShares ETF
The main advantage of trading using opposite Dimensional ETF and IShares ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, IShares ETF 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 ETF will offset losses from the drop in IShares ETF'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 ETF vs. iShares TIPS Bond | IShares ETF vs. Quadratic Interest Rate | IShares ETF vs. JPMorgan Inflation Managed | IShares ETF vs. FlexShares iBoxx 5 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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