Correlation Between Dimensional ETF and Xtrackers California
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and Xtrackers California 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 Xtrackers California 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 Xtrackers California Municipal, you can compare the effects of market volatilities on Dimensional ETF and Xtrackers California 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 Xtrackers California. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and Xtrackers California.
Diversification Opportunities for Dimensional ETF and Xtrackers California
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and Xtrackers is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Xtrackers California Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers California 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 Xtrackers California. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers California has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Xtrackers California go up and down completely randomly.
Pair Corralation between Dimensional ETF and Xtrackers California
Given the investment horizon of 90 days Dimensional ETF is expected to generate 1.22 times less return on investment than Xtrackers California. But when comparing it to its historical volatility, Dimensional ETF Trust is 1.75 times less risky than Xtrackers California. It trades about 0.09 of its potential returns per unit of risk. Xtrackers California Municipal is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,453 in Xtrackers California Municipal on September 4, 2024 and sell it today you would earn a total of 91.00 from holding Xtrackers California Municipal or generate 3.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.79% |
| Values | Daily Returns |
Dimensional ETF Trust vs. Xtrackers California Municipal
Performance |
| Timeline |
| Dimensional ETF Trust |
| Xtrackers California |
Dimensional ETF and Xtrackers California Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and Xtrackers California
The main advantage of trading using opposite Dimensional ETF and Xtrackers California positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, Xtrackers California 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 Xtrackers California will offset losses from the drop in Xtrackers California's long position.| Dimensional ETF vs. Vanguard Tax Exempt Bond | Dimensional ETF vs. Vanguard Ultra Short Bond | Dimensional ETF vs. Vanguard Tax Exempt Bond | Dimensional ETF vs. Vanguard Total Corporate |
| Xtrackers California vs. BlackRock High Yield | Xtrackers California vs. Dimensional ETF Trust | Xtrackers California vs. JP Morgan Exchange Traded | Xtrackers California vs. Janus Detroit Street |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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