Correlation Between Dimensional ETF and Fidelity Limited
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and Fidelity Limited 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 Fidelity Limited 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 Fidelity Limited Term, you can compare the effects of market volatilities on Dimensional ETF and Fidelity Limited 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 Fidelity Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and Fidelity Limited.
Diversification Opportunities for Dimensional ETF and Fidelity Limited
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dimensional and Fidelity is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Fidelity Limited Term in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fidelity Limited 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 Fidelity Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fidelity Limited Term has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Fidelity Limited go up and down completely randomly.
Pair Corralation between Dimensional ETF and Fidelity Limited
Given the investment horizon of 90 days Dimensional ETF Trust is expected to under-perform the Fidelity Limited. In addition to that, Dimensional ETF is 2.21 times more volatile than Fidelity Limited Term. It trades about -0.1 of its total potential returns per unit of risk. Fidelity Limited Term is currently generating about -0.11 per unit of volatility. If you would invest 4,982 in Fidelity Limited Term on August 26, 2024 and sell it today you would lose (13.00) from holding Fidelity Limited Term or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional ETF Trust vs. Fidelity Limited Term
Performance |
| Timeline |
| Dimensional ETF Trust |
| Fidelity Limited Term |
Dimensional ETF and Fidelity Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and Fidelity Limited
The main advantage of trading using opposite Dimensional ETF and Fidelity Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, Fidelity Limited 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 Fidelity Limited will offset losses from the drop in Fidelity Limited's long position.| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Core Equity |
| Fidelity Limited vs. Fidelity Corporate Bond | Fidelity Limited vs. Fidelity Total Bond | Fidelity Limited vs. Fidelity High Yield | Fidelity Limited vs. Fidelity Momentum Factor |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Stocks Directory Find actively traded stocks across global markets | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |