Correlation Between IShares Core and Dimensional International
Can any of the company-specific risk be diversified away by investing in both IShares Core and Dimensional International 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 IShares Core and Dimensional International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core MSCI and Dimensional International Core, you can compare the effects of market volatilities on IShares Core and Dimensional International 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 IShares Core with a short position of Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Dimensional International.
Diversification Opportunities for IShares Core and Dimensional International
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between IShares and Dimensional is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and Dimensional International Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International and IShares Core 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 iShares Core MSCI are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of IShares Core i.e., IShares Core and Dimensional International go up and down completely randomly.
Pair Corralation between IShares Core and Dimensional International
Given the investment horizon of 90 days iShares Core MSCI is expected to generate 1.06 times more return on investment than Dimensional International. However, IShares Core is 1.06 times more volatile than Dimensional International Core. It trades about 0.38 of its potential returns per unit of risk. Dimensional International Core is currently generating about 0.34 per unit of risk. If you would invest 6,432 in iShares Core MSCI on November 3, 2024 and sell it today you would earn a total of 365.00 from holding iShares Core MSCI or generate 5.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core MSCI vs. Dimensional International Core
Performance |
| Timeline |
| iShares Core MSCI |
| Dimensional International |
IShares Core and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Dimensional International
The main advantage of trading using opposite IShares Core and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Dimensional International 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 International will offset losses from the drop in Dimensional International's long position.| IShares Core vs. Horizon Kinetics Medical | IShares Core vs. Genenta Science SpA | IShares Core vs. ESSA Pharma | IShares Core vs. Inogen Inc |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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