Correlation Between Balanced Fund and Dimensional Retirement
Can any of the company-specific risk be diversified away by investing in both Balanced Fund and Dimensional Retirement 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 Balanced Fund and Dimensional Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Fund Investor and Dimensional Retirement Income, you can compare the effects of market volatilities on Balanced Fund and Dimensional Retirement 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 Balanced Fund with a short position of Dimensional Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Fund and Dimensional Retirement.
Diversification Opportunities for Balanced Fund and Dimensional Retirement
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Balanced and Dimensional is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Fund Investor and Dimensional Retirement Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Retirement and Balanced Fund 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 Balanced Fund Investor are associated (or correlated) with Dimensional Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Retirement has no effect on the direction of Balanced Fund i.e., Balanced Fund and Dimensional Retirement go up and down completely randomly.
Pair Corralation between Balanced Fund and Dimensional Retirement
Assuming the 90 days horizon Balanced Fund Investor is expected to generate 2.12 times more return on investment than Dimensional Retirement. However, Balanced Fund is 2.12 times more volatile than Dimensional Retirement Income. It trades about 0.1 of its potential returns per unit of risk. Dimensional Retirement Income is currently generating about 0.11 per unit of risk. If you would invest 1,694 in Balanced Fund Investor on September 12, 2024 and sell it today you would earn a total of 344.00 from holding Balanced Fund Investor or generate 20.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Balanced Fund Investor vs. Dimensional Retirement Income
Performance |
| Timeline |
| Balanced Fund Investor |
| Dimensional Retirement |
Balanced Fund and Dimensional Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Fund and Dimensional Retirement
The main advantage of trading using opposite Balanced Fund and Dimensional Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Fund position performs unexpectedly, Dimensional Retirement 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 Retirement will offset losses from the drop in Dimensional Retirement's long position.| Balanced Fund vs. Select Fund Investor | Balanced Fund vs. Heritage Fund Investor | Balanced Fund vs. Value Fund Investor | Balanced Fund vs. Growth Fund Investor |
| Dimensional Retirement vs. Balanced Fund Investor | Dimensional Retirement vs. Artisan Thematic Fund | Dimensional Retirement vs. T Rowe Price | Dimensional Retirement vs. T Rowe Price |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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