Correlation Between Dimensional Global and Dimensional Australia
Can any of the company-specific risk be diversified away by investing in both Dimensional Global and Dimensional Australia 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 Global and Dimensional Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional Global Core and Dimensional Australia Core, you can compare the effects of market volatilities on Dimensional Global and Dimensional Australia 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 Global with a short position of Dimensional Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Global and Dimensional Australia.
Diversification Opportunities for Dimensional Global and Dimensional Australia
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dimensional and Dimensional is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Global Core and Dimensional Australia Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Australia and Dimensional Global 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 Global Core are associated (or correlated) with Dimensional Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Australia has no effect on the direction of Dimensional Global i.e., Dimensional Global and Dimensional Australia go up and down completely randomly.
Pair Corralation between Dimensional Global and Dimensional Australia
Assuming the 90 days trading horizon Dimensional Global is expected to generate 1.12 times less return on investment than Dimensional Australia. In addition to that, Dimensional Global is 1.31 times more volatile than Dimensional Australia Core. It trades about 0.15 of its total potential returns per unit of risk. Dimensional Australia Core is currently generating about 0.22 per unit of volatility. If you would invest 1,641 in Dimensional Australia Core on October 24, 2024 and sell it today you would earn a total of 43.00 from holding Dimensional Australia Core or generate 2.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Global Core vs. Dimensional Australia Core
Performance |
| Timeline |
| Dimensional Global Core |
| Dimensional Australia |
Dimensional Global and Dimensional Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Global and Dimensional Australia
The main advantage of trading using opposite Dimensional Global and Dimensional Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Global position performs unexpectedly, Dimensional Australia 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 Dimensional Australia will offset losses from the drop in Dimensional Australia's long position.| Dimensional Global vs. Dimensional Global Core | Dimensional Global vs. Dimensional Australia Core | Dimensional Global vs. Dimensional Global Value | Dimensional Global vs. iShares MSCI Emerging |
| Dimensional Australia vs. Dimensional Global Core | Dimensional Australia vs. Dimensional Global Core | Dimensional Australia vs. Dimensional Global Value | Dimensional Australia vs. iShares MSCI Emerging |
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 Stocks Directory module to find actively traded stocks across global markets.
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