Correlation Between Dimensional ETF and Vanguard Short
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and Vanguard Short 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 Vanguard Short 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 Vanguard Short Term Bond, you can compare the effects of market volatilities on Dimensional ETF and Vanguard Short 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 Vanguard Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and Vanguard Short.
Diversification Opportunities for Dimensional ETF and Vanguard Short
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and Vanguard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Vanguard Short Term Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Short Term 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 Vanguard Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Short Term has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Vanguard Short go up and down completely randomly.
Pair Corralation between Dimensional ETF and Vanguard Short
Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 2.19 times more return on investment than Vanguard Short. However, Dimensional ETF is 2.19 times more volatile than Vanguard Short Term Bond. It trades about 0.07 of its potential returns per unit of risk. Vanguard Short Term Bond is currently generating about 0.12 per unit of risk. If you would invest 3,895 in Dimensional ETF Trust on August 29, 2024 and sell it today you would earn a total of 321.00 from holding Dimensional ETF Trust or generate 8.24% 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. Vanguard Short Term Bond
Performance |
| Timeline |
| Dimensional ETF Trust |
| Vanguard Short Term |
Dimensional ETF and Vanguard Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and Vanguard Short
The main advantage of trading using opposite Dimensional ETF and Vanguard Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, Vanguard Short 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 Vanguard Short will offset losses from the drop in Vanguard Short'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 |
| Vanguard Short vs. Vanguard Intermediate Term Bond | Vanguard Short vs. Vanguard Long Term Bond | Vanguard Short vs. Vanguard Short Term Corporate | Vanguard Short vs. Vanguard Total Bond |
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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