Correlation Between Dimensional ETF and Federated Hermes
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and Federated Hermes 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 Federated Hermes 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 Federated Hermes ETF, you can compare the effects of market volatilities on Dimensional ETF and Federated Hermes 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 Federated Hermes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and Federated Hermes.
Diversification Opportunities for Dimensional ETF and Federated Hermes
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dimensional and Federated is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Federated Hermes ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Hermes ETF 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 Federated Hermes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Hermes ETF has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Federated Hermes go up and down completely randomly.
Pair Corralation between Dimensional ETF and Federated Hermes
Given the investment horizon of 90 days Dimensional ETF Trust is expected to under-perform the Federated Hermes. But the etf apears to be less risky and, when comparing its historical volatility, Dimensional ETF Trust is 1.72 times less risky than Federated Hermes. The etf trades about -0.01 of its potential returns per unit of risk. The Federated Hermes ETF is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2,575 in Federated Hermes ETF on September 1, 2024 and sell it today you would earn a total of 237.00 from holding Federated Hermes ETF or generate 9.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dimensional ETF Trust vs. Federated Hermes ETF
Performance |
| Timeline |
| Dimensional ETF Trust |
| Federated Hermes ETF |
Dimensional ETF and Federated Hermes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and Federated Hermes
The main advantage of trading using opposite Dimensional ETF and Federated Hermes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, Federated Hermes 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 Federated Hermes will offset losses from the drop in Federated Hermes' long position.| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional International Value | Dimensional ETF vs. Dimensional Targeted Value |
| Federated Hermes vs. Schwab Fundamental Large | Federated Hermes vs. Schwab Fundamental International | Federated Hermes vs. Schwab Fundamental International | Federated Hermes vs. Schwab Fundamental Emerging |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital |