Correlation Between FT Vest and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both FT Vest and Dimensional ETF 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 FT Vest and Dimensional ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FT Vest Equity and Dimensional ETF Trust, you can compare the effects of market volatilities on FT Vest and Dimensional ETF 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 FT Vest with a short position of Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Vest and Dimensional ETF.
Diversification Opportunities for FT Vest and Dimensional ETF
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DHDG and Dimensional is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding FT Vest Equity and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust and FT Vest 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 FT Vest Equity are associated (or correlated) with Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of FT Vest i.e., FT Vest and Dimensional ETF go up and down completely randomly.
Pair Corralation between FT Vest and Dimensional ETF
Given the investment horizon of 90 days FT Vest is expected to generate 1.79 times less return on investment than Dimensional ETF. But when comparing it to its historical volatility, FT Vest Equity is 1.7 times less risky than Dimensional ETF. It trades about 0.16 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 5,069 in Dimensional ETF Trust on August 30, 2024 and sell it today you would earn a total of 1,787 from holding Dimensional ETF Trust or generate 35.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 10.37% |
| Values | Daily Returns |
FT Vest Equity vs. Dimensional ETF Trust
Performance |
| Timeline |
| FT Vest Equity |
| Dimensional ETF Trust |
FT Vest and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FT Vest and Dimensional ETF
The main advantage of trading using opposite FT Vest and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FT Vest position performs unexpectedly, Dimensional ETF 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 Dimensional ETF will offset losses from the drop in Dimensional ETF's long position.| FT Vest vs. Northern Lights | FT Vest vs. Dimensional International High | FT Vest vs. First Trust Exchange Traded | FT Vest vs. EA Series Trust |
| Dimensional ETF vs. FT Vest Equity | Dimensional ETF vs. Northern Lights | Dimensional ETF vs. Dimensional International High | Dimensional ETF vs. First Trust Exchange Traded |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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