Correlation Between Dimensional ETF and SPDR Nuveen
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and SPDR Nuveen 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 SPDR Nuveen 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 SPDR Nuveen Bloomberg, you can compare the effects of market volatilities on Dimensional ETF and SPDR Nuveen 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 SPDR Nuveen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and SPDR Nuveen.
Diversification Opportunities for Dimensional ETF and SPDR Nuveen
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dimensional and SPDR is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and SPDR Nuveen Bloomberg in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Nuveen Bloomberg 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 SPDR Nuveen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Nuveen Bloomberg has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and SPDR Nuveen go up and down completely randomly.
Pair Corralation between Dimensional ETF and SPDR Nuveen
Given the investment horizon of 90 days Dimensional ETF is expected to generate 1.24 times less return on investment than SPDR Nuveen. In addition to that, Dimensional ETF is 1.13 times more volatile than SPDR Nuveen Bloomberg. It trades about 0.05 of its total potential returns per unit of risk. SPDR Nuveen Bloomberg is currently generating about 0.07 per unit of volatility. If you would invest 4,692 in SPDR Nuveen Bloomberg on October 26, 2024 and sell it today you would earn a total of 56.00 from holding SPDR Nuveen Bloomberg or generate 1.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional ETF Trust vs. SPDR Nuveen Bloomberg
Performance |
| Timeline |
| Dimensional ETF Trust |
| SPDR Nuveen Bloomberg |
Dimensional ETF and SPDR Nuveen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and SPDR Nuveen
The main advantage of trading using opposite Dimensional ETF and SPDR Nuveen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, SPDR Nuveen 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 SPDR Nuveen will offset losses from the drop in SPDR Nuveen'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 |
| SPDR Nuveen vs. SPDR Nuveen Bloomberg | SPDR Nuveen vs. VanEck Intermediate Muni | SPDR Nuveen vs. Invesco National AMT Free | SPDR Nuveen vs. VanEck Short Muni |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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