Correlation Between Dimensional ETF and Innovator Small
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and Innovator Small 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 Innovator Small 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 Innovator Small Cap, you can compare the effects of market volatilities on Dimensional ETF and Innovator Small 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 Innovator Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and Innovator Small.
Diversification Opportunities for Dimensional ETF and Innovator Small
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dimensional and Innovator is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Innovator Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovator Small Cap 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 Innovator Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovator Small Cap has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Innovator Small go up and down completely randomly.
Pair Corralation between Dimensional ETF and Innovator Small
Given the investment horizon of 90 days Dimensional ETF is expected to generate 1.14 times less return on investment than Innovator Small. In addition to that, Dimensional ETF is 1.58 times more volatile than Innovator Small Cap. It trades about 0.02 of its total potential returns per unit of risk. Innovator Small Cap is currently generating about 0.03 per unit of volatility. If you would invest 2,493 in Innovator Small Cap on November 28, 2024 and sell it today you would earn a total of 56.30 from holding Innovator Small Cap or generate 2.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 66.12% |
| Values | Daily Returns |
Dimensional ETF Trust vs. Innovator Small Cap
Performance |
| Timeline |
| Dimensional ETF Trust |
| Innovator Small Cap |
Dimensional ETF and Innovator Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and Innovator Small
The main advantage of trading using opposite Dimensional ETF and Innovator Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, Innovator Small 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 Innovator Small will offset losses from the drop in Innovator Small's 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 |
| Innovator Small vs. Dimensional ETF Trust | Innovator Small vs. Vanguard Small Cap Index | Innovator Small vs. First Trust Multi Manager | Innovator Small vs. Vanguard SP Small Cap |
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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