Correlation Between Dimensional International and Vident International
Can any of the company-specific risk be diversified away by investing in both Dimensional International and Vident International 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 Vident International 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 Vident International Equity, you can compare the effects of market volatilities on Dimensional International and Vident International 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 Vident International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and Vident International.
Diversification Opportunities for Dimensional International and Vident International
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and Vident is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International Valu and Vident International Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vident International 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 Vident International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vident International has no effect on the direction of Dimensional International i.e., Dimensional International and Vident International go up and down completely randomly.
Pair Corralation between Dimensional International and Vident International
Given the investment horizon of 90 days Dimensional International Value is expected to generate 0.98 times more return on investment than Vident International. However, Dimensional International Value is 1.02 times less risky than Vident International. It trades about 0.39 of its potential returns per unit of risk. Vident International Equity is currently generating about 0.15 per unit of risk. If you would invest 3,516 in Dimensional International Value on October 23, 2024 and sell it today you would earn a total of 184.00 from holding Dimensional International Value or generate 5.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional International Valu vs. Vident International Equity
Performance |
| Timeline |
| Dimensional International |
| Vident International |
Dimensional International and Vident International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and Vident International
The main advantage of trading using opposite Dimensional International and Vident International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International position performs unexpectedly, Vident International 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 Vident International will offset losses from the drop in Vident International's long position.The idea behind Dimensional International Value and Vident International Equity 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.
| Vident International vs. Vident Core Equity | Vident International vs. Vident Core Bond | Vident International vs. iShares MSCI ACWI | Vident International vs. BMO Mid Federal |
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.
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