Correlation Between VictoryShares USAA and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both VictoryShares USAA 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 VictoryShares USAA and Dimensional ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VictoryShares USAA Core and Dimensional ETF Trust, you can compare the effects of market volatilities on VictoryShares USAA 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 VictoryShares USAA with a short position of Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of VictoryShares USAA and Dimensional ETF.
Diversification Opportunities for VictoryShares USAA and Dimensional ETF
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between VictoryShares and Dimensional is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding VictoryShares USAA Core 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 VictoryShares USAA 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 VictoryShares USAA Core 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 VictoryShares USAA i.e., VictoryShares USAA and Dimensional ETF go up and down completely randomly.
Pair Corralation between VictoryShares USAA and Dimensional ETF
Given the investment horizon of 90 days VictoryShares USAA is expected to generate 1.76 times less return on investment than Dimensional ETF. But when comparing it to its historical volatility, VictoryShares USAA Core is 3.6 times less risky than Dimensional ETF. It trades about 0.13 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 4,180 in Dimensional ETF Trust on August 29, 2024 and sell it today you would earn a total of 23.00 from holding Dimensional ETF Trust or generate 0.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VictoryShares USAA Core vs. Dimensional ETF Trust
Performance |
| Timeline |
| VictoryShares USAA Core |
| Dimensional ETF Trust |
VictoryShares USAA and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VictoryShares USAA and Dimensional ETF
The main advantage of trading using opposite VictoryShares USAA and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VictoryShares USAA 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.The idea behind VictoryShares USAA Core and Dimensional ETF Trust pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Core Equity | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Emerging Core |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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