Correlation Between Dimensional International and SPDR Portfolio
Can any of the company-specific risk be diversified away by investing in both Dimensional International and SPDR Portfolio 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 SPDR Portfolio 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 SPDR Portfolio SP, you can compare the effects of market volatilities on Dimensional International and SPDR Portfolio 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 SPDR Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and SPDR Portfolio.
Diversification Opportunities for Dimensional International and SPDR Portfolio
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dimensional and SPDR is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and SPDR Portfolio SP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Portfolio SP 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 SPDR Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Portfolio SP has no effect on the direction of Dimensional International i.e., Dimensional International and SPDR Portfolio go up and down completely randomly.
Pair Corralation between Dimensional International and SPDR Portfolio
Given the investment horizon of 90 days Dimensional International High is expected to under-perform the SPDR Portfolio. But the etf apears to be less risky and, when comparing its historical volatility, Dimensional International High is 1.29 times less risky than SPDR Portfolio. The etf trades about -0.12 of its potential returns per unit of risk. The SPDR Portfolio SP is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 8,000 in SPDR Portfolio SP on August 28, 2024 and sell it today you would earn a total of 637.00 from holding SPDR Portfolio SP or generate 7.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional International High vs. SPDR Portfolio SP
Performance |
| Timeline |
| Dimensional International |
| SPDR Portfolio SP |
Dimensional International and SPDR Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional International and SPDR Portfolio
The main advantage of trading using opposite Dimensional International and SPDR Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International position performs unexpectedly, SPDR Portfolio 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 Portfolio will offset losses from the drop in SPDR Portfolio's long position.The idea behind Dimensional International High and SPDR Portfolio SP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| SPDR Portfolio vs. FT Vest Equity | SPDR Portfolio vs. Northern Lights | SPDR Portfolio vs. Dimensional International High | SPDR Portfolio 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. |