Correlation Between Dimensional ETF and BlackRock Intermediate
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and BlackRock Intermediate 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 BlackRock Intermediate 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 BlackRock Intermediate Muni, you can compare the effects of market volatilities on Dimensional ETF and BlackRock Intermediate 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 BlackRock Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and BlackRock Intermediate.
Diversification Opportunities for Dimensional ETF and BlackRock Intermediate
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and BlackRock is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and BlackRock Intermediate Muni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Intermediate 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 BlackRock Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Intermediate has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and BlackRock Intermediate go up and down completely randomly.
Pair Corralation between Dimensional ETF and BlackRock Intermediate
Given the investment horizon of 90 days Dimensional ETF is expected to generate 1.35 times less return on investment than BlackRock Intermediate. But when comparing it to its historical volatility, Dimensional ETF Trust is 1.96 times less risky than BlackRock Intermediate. It trades about 0.04 of its potential returns per unit of risk. BlackRock Intermediate Muni is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,354 in BlackRock Intermediate Muni on October 26, 2024 and sell it today you would earn a total of 11.00 from holding BlackRock Intermediate Muni or generate 0.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional ETF Trust vs. BlackRock Intermediate Muni
Performance |
| Timeline |
| Dimensional ETF Trust |
| BlackRock Intermediate |
Dimensional ETF and BlackRock Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and BlackRock Intermediate
The main advantage of trading using opposite Dimensional ETF and BlackRock Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, BlackRock Intermediate 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 BlackRock Intermediate will offset losses from the drop in BlackRock Intermediate'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 |
| BlackRock Intermediate vs. BlackRock High Yield | BlackRock Intermediate vs. iShares iBonds Dec | BlackRock Intermediate vs. iShares Short Maturity | BlackRock Intermediate vs. iShares iBonds Dec |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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