Correlation Between Vanguard Australian and Dimensional Global
Can any of the company-specific risk be diversified away by investing in both Vanguard Australian and Dimensional Global 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 Vanguard Australian and Dimensional Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Australian Shares and Dimensional Global Core, you can compare the effects of market volatilities on Vanguard Australian and Dimensional Global 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 Vanguard Australian with a short position of Dimensional Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Australian and Dimensional Global.
Diversification Opportunities for Vanguard Australian and Dimensional Global
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Dimensional is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Australian Shares and Dimensional Global Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Global Core and Vanguard Australian 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 Vanguard Australian Shares are associated (or correlated) with Dimensional Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Global Core has no effect on the direction of Vanguard Australian i.e., Vanguard Australian and Dimensional Global go up and down completely randomly.
Pair Corralation between Vanguard Australian and Dimensional Global
Assuming the 90 days trading horizon Vanguard Australian is expected to generate 1.15 times less return on investment than Dimensional Global. In addition to that, Vanguard Australian is 1.08 times more volatile than Dimensional Global Core. It trades about 0.12 of its total potential returns per unit of risk. Dimensional Global Core is currently generating about 0.14 per unit of volatility. If you would invest 2,203 in Dimensional Global Core on September 4, 2024 and sell it today you would earn a total of 575.00 from holding Dimensional Global Core or generate 26.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Australian Shares vs. Dimensional Global Core
Performance |
| Timeline |
| Vanguard Australian |
| Dimensional Global Core |
Vanguard Australian and Dimensional Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Australian and Dimensional Global
The main advantage of trading using opposite Vanguard Australian and Dimensional Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Australian position performs unexpectedly, Dimensional Global 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 Global will offset losses from the drop in Dimensional Global's long position.| Vanguard Australian vs. Vanguard Global Minimum | Vanguard Australian vs. Vanguard Global Aggregate | Vanguard Australian vs. Vanguard Australian Fixed | Vanguard Australian vs. Vanguard Global Infrastructure |
| Dimensional Global vs. Betashares Asia Technology | Dimensional Global vs. CD Private Equity | Dimensional Global vs. BetaShares Australia 200 | Dimensional Global vs. Australian High Interest |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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