Correlation Between Dimensional ETF and SPDR SP
Can any of the company-specific risk be diversified away by investing in both Dimensional ETF and SPDR SP 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 SPDR SP 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 SPDR SP 400, you can compare the effects of market volatilities on Dimensional ETF and SPDR SP 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 SPDR SP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and SPDR SP.
Diversification Opportunities for Dimensional ETF and SPDR SP
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dimensional and SPDR is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and SPDR SP 400 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SP 400 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 SPDR SP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SP 400 has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and SPDR SP go up and down completely randomly.
Pair Corralation between Dimensional ETF and SPDR SP
Given the investment horizon of 90 days Dimensional ETF Trust is expected to under-perform the SPDR SP. But the etf apears to be less risky and, when comparing its historical volatility, Dimensional ETF Trust is 1.23 times less risky than SPDR SP. The etf trades about -0.08 of its potential returns per unit of risk. The SPDR SP 400 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 7,773 in SPDR SP 400 on October 18, 2024 and sell it today you would earn a total of 442.00 from holding SPDR SP 400 or generate 5.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional ETF Trust vs. SPDR SP 400
Performance |
| Timeline |
| Dimensional ETF Trust |
| SPDR SP 400 |
Dimensional ETF and SPDR SP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional ETF and SPDR SP
The main advantage of trading using opposite Dimensional ETF and SPDR SP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional ETF position performs unexpectedly, SPDR SP 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 SP will offset losses from the drop in SPDR SP'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 |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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