Correlation Between IShares Core and Dimensional Equity
Can any of the company-specific risk be diversified away by investing in both IShares Core and Dimensional Equity 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 Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core SP and Dimensional Equity ETF, you can compare the effects of market volatilities on IShares Core and Dimensional Equity 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 Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and Dimensional Equity.
Diversification Opportunities for IShares Core and Dimensional Equity
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 SP and Dimensional Equity ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Equity ETF 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 SP are associated (or correlated) with Dimensional Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Equity ETF has no effect on the direction of IShares Core i.e., IShares Core and Dimensional Equity go up and down completely randomly.
Pair Corralation between IShares Core and Dimensional Equity
Considering the 90-day investment horizon IShares Core is expected to generate 1.27 times less return on investment than Dimensional Equity. But when comparing it to its historical volatility, iShares Core SP is 1.08 times less risky than Dimensional Equity. It trades about 0.16 of its potential returns per unit of risk. Dimensional Equity ETF is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 6,297 in Dimensional Equity ETF on August 29, 2024 and sell it today you would earn a total of 251.00 from holding Dimensional Equity ETF or generate 3.99% 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 SP vs. Dimensional Equity ETF
Performance |
| Timeline |
| iShares Core SP |
| Dimensional Equity ETF |
IShares Core and Dimensional Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and Dimensional Equity
The main advantage of trading using opposite IShares Core and Dimensional Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, Dimensional Equity 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 Equity will offset losses from the drop in Dimensional Equity's long position.| IShares Core vs. iShares Core SP | IShares Core vs. iShares Core SP | IShares Core vs. iShares SP 500 | IShares Core vs. iShares Russell 2000 |
| Dimensional Equity vs. JPMorgan BetaBuilders International | Dimensional Equity vs. JPMorgan Core Plus | Dimensional Equity vs. JPMorgan BetaBuilders Canada | Dimensional Equity vs. JPMorgan Emerging Markets |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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