Correlation Between Dimensional 2045 and Global Allocation
Can any of the company-specific risk be diversified away by investing in both Dimensional 2045 and Global Allocation 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 2045 and Global Allocation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional 2045 Target and Global Allocation 2575, you can compare the effects of market volatilities on Dimensional 2045 and Global Allocation 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 2045 with a short position of Global Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional 2045 and Global Allocation.
Diversification Opportunities for Dimensional 2045 and Global Allocation
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Dimensional and Global is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional 2045 Target and Global Allocation 2575 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Allocation 2575 and Dimensional 2045 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 2045 Target are associated (or correlated) with Global Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Allocation 2575 has no effect on the direction of Dimensional 2045 i.e., Dimensional 2045 and Global Allocation go up and down completely randomly.
Pair Corralation between Dimensional 2045 and Global Allocation
Assuming the 90 days horizon Dimensional 2045 Target is expected to generate 2.86 times more return on investment than Global Allocation. However, Dimensional 2045 is 2.86 times more volatile than Global Allocation 2575. It trades about 0.1 of its potential returns per unit of risk. Global Allocation 2575 is currently generating about 0.14 per unit of risk. If you would invest 1,407 in Dimensional 2045 Target on September 3, 2024 and sell it today you would earn a total of 519.00 from holding Dimensional 2045 Target or generate 36.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional 2045 Target vs. Global Allocation 2575
Performance |
| Timeline |
| Dimensional 2045 Target |
| Global Allocation 2575 |
Dimensional 2045 and Global Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional 2045 and Global Allocation
The main advantage of trading using opposite Dimensional 2045 and Global Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional 2045 position performs unexpectedly, Global Allocation 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 Global Allocation will offset losses from the drop in Global Allocation's long position.| Dimensional 2045 vs. Dimensional 2055 Target | Dimensional 2045 vs. Dimensional 2060 Target | Dimensional 2045 vs. Dimensional 2025 Target | Dimensional 2045 vs. Dimensional 2035 Target |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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