Correlation Between Dimensional Marketwide and Franklin International
Can any of the company-specific risk be diversified away by investing in both Dimensional Marketwide and Franklin International 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 Marketwide and Franklin International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional Marketwide Value and Franklin International Core, you can compare the effects of market volatilities on Dimensional Marketwide and Franklin International 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 Marketwide with a short position of Franklin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Marketwide and Franklin International.
Diversification Opportunities for Dimensional Marketwide and Franklin International
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dimensional and Franklin is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Marketwide Value and Franklin International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin International and Dimensional Marketwide 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 Marketwide Value are associated (or correlated) with Franklin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin International has no effect on the direction of Dimensional Marketwide i.e., Dimensional Marketwide and Franklin International go up and down completely randomly.
Pair Corralation between Dimensional Marketwide and Franklin International
Given the investment horizon of 90 days Dimensional Marketwide Value is expected to generate 1.05 times more return on investment than Franklin International. However, Dimensional Marketwide is 1.05 times more volatile than Franklin International Core. It trades about 0.07 of its potential returns per unit of risk. Franklin International Core is currently generating about 0.05 per unit of risk. If you would invest 3,275 in Dimensional Marketwide Value on August 28, 2024 and sell it today you would earn a total of 1,160 from holding Dimensional Marketwide Value or generate 35.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional Marketwide Value vs. Franklin International Core
Performance |
| Timeline |
| Dimensional Marketwide |
| Franklin International |
Dimensional Marketwide and Franklin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional Marketwide and Franklin International
The main advantage of trading using opposite Dimensional Marketwide and Franklin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Marketwide position performs unexpectedly, Franklin International 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 Franklin International will offset losses from the drop in Franklin International's long position.| Dimensional Marketwide vs. BlackRock ETF Trust | Dimensional Marketwide vs. Rbb Fund | Dimensional Marketwide vs. Virtus ETF Trust | Dimensional Marketwide vs. Amplify CWP Enhanced |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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