Correlation Between Litman Gregory and Dimensional International
Can any of the company-specific risk be diversified away by investing in both Litman Gregory 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 Litman Gregory and Dimensional International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Litman Gregory Funds and Dimensional International High, you can compare the effects of market volatilities on Litman Gregory 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 Litman Gregory with a short position of Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Litman Gregory and Dimensional International.
Diversification Opportunities for Litman Gregory and Dimensional International
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Litman and Dimensional is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Litman Gregory Funds and Dimensional International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International and Litman Gregory 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 Litman Gregory Funds 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 Litman Gregory i.e., Litman Gregory and Dimensional International go up and down completely randomly.
Pair Corralation between Litman Gregory and Dimensional International
Given the investment horizon of 90 days Litman Gregory Funds is expected to generate 1.02 times more return on investment than Dimensional International. However, Litman Gregory is 1.02 times more volatile than Dimensional International High. It trades about 0.34 of its potential returns per unit of risk. Dimensional International High is currently generating about 0.04 per unit of risk. If you would invest 1,141 in Litman Gregory Funds on September 4, 2024 and sell it today you would earn a total of 68.00 from holding Litman Gregory Funds or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Litman Gregory Funds vs. Dimensional International High
Performance |
| Timeline |
| Litman Gregory Funds |
| Dimensional International |
Litman Gregory and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Litman Gregory and Dimensional International
The main advantage of trading using opposite Litman Gregory and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Litman Gregory 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.| Litman Gregory vs. Franklin Templeton ETF | Litman Gregory vs. TrueShares Technology AI | Litman Gregory vs. Franklin Exponential Data | Litman Gregory vs. Franklin Genomic Advancements |
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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