Correlation Between IShares Consumer and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both IShares Consumer and Dimensional ETF 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 Consumer and Dimensional ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Consumer Discretionary and Dimensional ETF Trust, you can compare the effects of market volatilities on IShares Consumer and Dimensional ETF 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 Consumer with a short position of Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Consumer and Dimensional ETF.
Diversification Opportunities for IShares Consumer and Dimensional ETF
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between IShares and Dimensional is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding iShares Consumer Discretionary and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust and IShares Consumer 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 Consumer Discretionary are associated (or correlated) with Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of IShares Consumer i.e., IShares Consumer and Dimensional ETF go up and down completely randomly.
Pair Corralation between IShares Consumer and Dimensional ETF
Considering the 90-day investment horizon iShares Consumer Discretionary is expected to generate 2.52 times more return on investment than Dimensional ETF. However, IShares Consumer is 2.52 times more volatile than Dimensional ETF Trust. It trades about 0.09 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.02 per unit of risk. If you would invest 6,081 in iShares Consumer Discretionary on August 24, 2024 and sell it today you would earn a total of 3,518 from holding iShares Consumer Discretionary or generate 57.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Consumer Discretionary vs. Dimensional ETF Trust
Performance |
| Timeline |
| iShares Consumer Dis |
| Dimensional ETF Trust |
IShares Consumer and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Consumer and Dimensional ETF
The main advantage of trading using opposite IShares Consumer and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Consumer position performs unexpectedly, Dimensional ETF 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 ETF will offset losses from the drop in Dimensional ETF's long position.| IShares Consumer vs. iShares Consumer Staples | IShares Consumer vs. iShares Industrials ETF | IShares Consumer vs. iShares Basic Materials | IShares Consumer vs. iShares Utilities ETF |
| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Core Equity |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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