Correlation Between IShares MSCI and Dimensional Targeted
Can any of the company-specific risk be diversified away by investing in both IShares MSCI and Dimensional Targeted 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 MSCI and Dimensional Targeted into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares MSCI Intl and Dimensional Targeted Value, you can compare the effects of market volatilities on IShares MSCI and Dimensional Targeted 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 MSCI with a short position of Dimensional Targeted. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares MSCI and Dimensional Targeted.
Diversification Opportunities for IShares MSCI and Dimensional Targeted
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between IShares and Dimensional is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding iShares MSCI Intl and Dimensional Targeted Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Targeted and IShares MSCI 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 MSCI Intl are associated (or correlated) with Dimensional Targeted. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Targeted has no effect on the direction of IShares MSCI i.e., IShares MSCI and Dimensional Targeted go up and down completely randomly.
Pair Corralation between IShares MSCI and Dimensional Targeted
Given the investment horizon of 90 days iShares MSCI Intl is expected to generate 0.73 times more return on investment than Dimensional Targeted. However, iShares MSCI Intl is 1.37 times less risky than Dimensional Targeted. It trades about 0.01 of its potential returns per unit of risk. Dimensional Targeted Value is currently generating about -0.06 per unit of risk. If you would invest 3,970 in iShares MSCI Intl on January 18, 2025 and sell it today you would earn a total of 6.00 from holding iShares MSCI Intl or generate 0.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares MSCI Intl vs. Dimensional Targeted Value
Performance |
| Timeline |
| iShares MSCI Intl |
| Dimensional Targeted |
IShares MSCI and Dimensional Targeted Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares MSCI and Dimensional Targeted
The main advantage of trading using opposite IShares MSCI and Dimensional Targeted positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares MSCI position performs unexpectedly, Dimensional Targeted 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 Targeted will offset losses from the drop in Dimensional Targeted's long position.| IShares MSCI vs. iShares MSCI Intl | IShares MSCI vs. iShares Edge MSCI | IShares MSCI vs. iShares Edge MSCI | IShares MSCI vs. iShares MSCI Emerging |
| Dimensional Targeted vs. SPDR SP 400 | Dimensional Targeted vs. SPDR SP 600 | Dimensional Targeted vs. SPDR SP 600 | Dimensional Targeted vs. SPDR Portfolio SP |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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