Correlation Between Dimensional ETF and American Century
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and American Century 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 American Century 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 American Century ETF, you can compare the effects of market volatilities on Dimensional ETF and American Century 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 American Century. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and American Century.
Diversification Opportunities for Dimensional ETF and American Century
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dimensional and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and American Century ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Century ETF 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 American Century. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Century ETF has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and American Century go up and down completely randomly.
Pair Corralation between Dimensional ETF and American Century
Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 0.54 times more return on investment than American Century. However, Dimensional ETF Trust is 1.85 times less risky than American Century. It trades about 0.05 of its potential returns per unit of risk. American Century ETF is currently generating about 0.01 per unit of risk. If you would invest 4,629 in Dimensional ETF Trust on September 19, 2024 and sell it today you would earn a total of 162.00 from holding Dimensional ETF Trust or generate 3.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 22.95% |
| Values | Daily Returns |
Dimensional ETF Trust vs. American Century ETF
Performance |
| Timeline |
| Dimensional ETF Trust |
| American Century ETF |
Dimensional ETF and American Century Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and American Century
The main advantage of trading using opposite Dimensional ETF and American Century positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, American Century 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 American Century will offset losses from the drop in American Century'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 Emerging Core |
| American Century vs. BlackRock High Yield | American Century vs. Dimensional ETF Trust | American Century vs. JP Morgan Exchange Traded | American Century 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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