Correlation Between Dimensional International and 2023 ETF
Can any of the company-specific risk be diversified away by investing in both Dimensional International and 2023 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 International and 2023 ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional International Value and 2023 ETF Series, you can compare the effects of market volatilities on Dimensional International and 2023 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 International with a short position of 2023 ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and 2023 ETF.
Diversification Opportunities for Dimensional International and 2023 ETF
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and 2023 is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International Valu and 2023 ETF Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2023 ETF Series and Dimensional International 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 International Value are associated (or correlated) with 2023 ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2023 ETF Series has no effect on the direction of Dimensional International i.e., Dimensional International and 2023 ETF go up and down completely randomly.
Pair Corralation between Dimensional International and 2023 ETF
Given the investment horizon of 90 days Dimensional International is expected to generate 1.56 times less return on investment than 2023 ETF. But when comparing it to its historical volatility, Dimensional International Value is 1.01 times less risky than 2023 ETF. It trades about 0.05 of its potential returns per unit of risk. 2023 ETF Series is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,457 in 2023 ETF Series on January 17, 2025 and sell it today you would earn a total of 767.00 from holding 2023 ETF Series or generate 31.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 77.73% |
| Values | Daily Returns |
Dimensional International Valu vs. 2023 ETF Series
Performance |
| Timeline |
| Dimensional International |
| 2023 ETF Series |
Dimensional International and 2023 ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and 2023 ETF
The main advantage of trading using opposite Dimensional International and 2023 ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International position performs unexpectedly, 2023 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 2023 ETF will offset losses from the drop in 2023 ETF's long position.The idea behind Dimensional International Value and 2023 ETF Series pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| 2023 ETF vs. FT Vest Equity | 2023 ETF vs. Northern Lights | 2023 ETF vs. Dimensional International High | 2023 ETF vs. First Trust Exchange Traded |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum |