Correlation Between Vanguard Core and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard Core 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 Vanguard Core and Dimensional ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Core Bond and Dimensional ETF Trust, you can compare the effects of market volatilities on Vanguard Core 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 Vanguard Core with a short position of Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Core and Dimensional ETF.
Diversification Opportunities for Vanguard Core and Dimensional ETF
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vanguard and Dimensional is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Core Bond 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 Vanguard Core 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 Core Bond 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 Vanguard Core i.e., Vanguard Core and Dimensional ETF go up and down completely randomly.
Pair Corralation between Vanguard Core and Dimensional ETF
Given the investment horizon of 90 days Vanguard Core Bond is expected to generate 1881.92 times more return on investment than Dimensional ETF. However, Vanguard Core is 1881.92 times more volatile than Dimensional ETF Trust. It trades about 0.06 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.66 per unit of risk. If you would invest 0.00 in Vanguard Core Bond on August 26, 2024 and sell it today you would earn a total of 7,665 from holding Vanguard Core Bond or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 81.63% |
| Values | Daily Returns |
Vanguard Core Bond vs. Dimensional ETF Trust
Performance |
| Timeline |
| Vanguard Core Bond |
| Dimensional ETF Trust |
Vanguard Core and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Core and Dimensional ETF
The main advantage of trading using opposite Vanguard Core and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Core 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.| Vanguard Core vs. iShares MSCI EAFE | Vanguard Core vs. iShares iBoxx Investment | Vanguard Core vs. iShares TIPS Bond | Vanguard Core vs. iShares 1 3 Year |
| Dimensional ETF vs. First Trust Low | Dimensional ETF vs. First Trust Senior | Dimensional ETF vs. First Trust TCW | Dimensional ETF vs. First Trust Tactical |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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