Correlation Between Dimensional ETF and Capital Group
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and Capital Group 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 Capital Group 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 Capital Group Fixed, you can compare the effects of market volatilities on Dimensional ETF and Capital Group 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 Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and Capital Group.
Diversification Opportunities for Dimensional ETF and Capital Group
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dimensional and Capital is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Capital Group Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Fixed 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 Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Fixed has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Capital Group go up and down completely randomly.
Pair Corralation between Dimensional ETF and Capital Group
Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 1.06 times more return on investment than Capital Group. However, Dimensional ETF is 1.06 times more volatile than Capital Group Fixed. It trades about 0.16 of its potential returns per unit of risk. Capital Group Fixed is currently generating about 0.1 per unit of risk. If you would invest 4,176 in Dimensional ETF Trust on September 1, 2024 and sell it today you would earn a total of 56.00 from holding Dimensional ETF Trust or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dimensional ETF Trust vs. Capital Group Fixed
Performance |
| Timeline |
| Dimensional ETF Trust |
| Capital Group Fixed |
Dimensional ETF and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and Capital Group
The main advantage of trading using opposite Dimensional ETF and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group'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 |
| Capital Group vs. Valued Advisers Trust | Capital Group vs. Columbia Diversified Fixed | Capital Group vs. Principal Exchange Traded Funds | Capital Group vs. Doubleline Etf Trust |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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