Correlation Between SPDR SPASX and Dimensional Global
Can any of the company-specific risk be diversified away by investing in both SPDR SPASX and Dimensional Global 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 SPDR SPASX and Dimensional Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPDR SPASX 200 and Dimensional Global Core, you can compare the effects of market volatilities on SPDR SPASX and Dimensional Global 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 SPDR SPASX with a short position of Dimensional Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPDR SPASX and Dimensional Global.
Diversification Opportunities for SPDR SPASX and Dimensional Global
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between SPDR and Dimensional is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding SPDR SPASX 200 and Dimensional Global Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Global Core and SPDR SPASX 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 SPDR SPASX 200 are associated (or correlated) with Dimensional Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Global Core has no effect on the direction of SPDR SPASX i.e., SPDR SPASX and Dimensional Global go up and down completely randomly.
Pair Corralation between SPDR SPASX and Dimensional Global
Assuming the 90 days trading horizon SPDR SPASX 200 is expected to generate 0.93 times more return on investment than Dimensional Global. However, SPDR SPASX 200 is 1.08 times less risky than Dimensional Global. It trades about -0.11 of its potential returns per unit of risk. Dimensional Global Core is currently generating about -0.24 per unit of risk. If you would invest 2,670 in SPDR SPASX 200 on October 7, 2024 and sell it today you would lose (46.00) from holding SPDR SPASX 200 or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
SPDR SPASX 200 vs. Dimensional Global Core
Performance |
| Timeline |
| SPDR SPASX 200 |
| Dimensional Global Core |
SPDR SPASX and Dimensional Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPDR SPASX and Dimensional Global
The main advantage of trading using opposite SPDR SPASX and Dimensional Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPDR SPASX position performs unexpectedly, Dimensional Global 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 Dimensional Global will offset losses from the drop in Dimensional Global's long position.| SPDR SPASX vs. SPDR SPASX 200 | SPDR SPASX vs. SPDR SPASX 50 | SPDR SPASX vs. SPDR MSCI World | SPDR SPASX vs. SPDR Dow Jones |
| Dimensional Global vs. Dimensional Global Core | Dimensional Global vs. Dimensional Australia Core | Dimensional Global vs. Dimensional Global Value | Dimensional Global vs. iShares MSCI 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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