Correlation Between Dimensional ETF and Listed Funds
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and Listed Funds 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 Listed Funds 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 Listed Funds Trust, you can compare the effects of market volatilities on Dimensional ETF and Listed Funds 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 Listed Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and Listed Funds.
Diversification Opportunities for Dimensional ETF and Listed Funds
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dimensional and Listed is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Listed Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Listed Funds Trust 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 Listed Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Listed Funds Trust has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Listed Funds go up and down completely randomly.
Pair Corralation between Dimensional ETF and Listed Funds
Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 0.76 times more return on investment than Listed Funds. However, Dimensional ETF Trust is 1.32 times less risky than Listed Funds. It trades about 0.21 of its potential returns per unit of risk. Listed Funds Trust is currently generating about 0.12 per unit of risk. If you would invest 4,786 in Dimensional ETF Trust on August 31, 2024 and sell it today you would earn a total of 42.00 from holding Dimensional ETF Trust or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional ETF Trust vs. Listed Funds Trust
Performance |
| Timeline |
| Dimensional ETF Trust |
| Listed Funds Trust |
Dimensional ETF and Listed Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and Listed Funds
The main advantage of trading using opposite Dimensional ETF and Listed Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, Listed Funds 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 Listed Funds will offset losses from the drop in Listed Funds' 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 |
| Listed Funds vs. Vanguard Intermediate Term Corporate | Listed Funds vs. Vanguard Short Term Bond | Listed Funds vs. Vanguard Long Term Corporate | Listed Funds vs. Vanguard Short Term Treasury |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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