Correlation Between Dimensional International and Capital Group
Can any of the company-specific risk be diversified away by investing in both Dimensional International and Capital Group 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 International and Capital Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional International High and Capital Group International, you can compare the effects of market volatilities on Dimensional International and Capital Group 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 International with a short position of Capital Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and Capital Group.
Diversification Opportunities for Dimensional International and Capital Group
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and Capital is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and Capital Group International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Group Intern and Dimensional International 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 International High are associated (or correlated) with Capital Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Group Intern has no effect on the direction of Dimensional International i.e., Dimensional International and Capital Group go up and down completely randomly.
Pair Corralation between Dimensional International and Capital Group
Given the investment horizon of 90 days Dimensional International is expected to generate 310.64 times less return on investment than Capital Group. But when comparing it to its historical volatility, Dimensional International High is 115.25 times less risky than Capital Group. It trades about 0.03 of its potential returns per unit of risk. Capital Group International is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Capital Group International on September 12, 2024 and sell it today you would earn a total of 2,491 from holding Capital Group International or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 33.52% |
| Values | Daily Returns |
Dimensional International High vs. Capital Group International
Performance |
| Timeline |
| Dimensional International |
| Capital Group Intern |
Dimensional International and Capital Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and Capital Group
The main advantage of trading using opposite Dimensional International and Capital Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International position performs unexpectedly, Capital Group 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 Capital Group will offset losses from the drop in Capital Group's long position.| Dimensional International vs. iShares MSCI Intl | Dimensional International vs. iShares MSCI Intl | Dimensional International vs. iShares Currency Hedged | Dimensional International vs. iShares Edge MSCI |
| Capital Group vs. FT Vest Equity | Capital Group vs. Northern Lights | Capital Group vs. Dimensional International High | Capital Group vs. JPMorgan Fundamental Data |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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