Correlation Between Vanguard Dividend and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both Vanguard Dividend 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 Dividend 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 Dividend Appreciation and Dimensional ETF Trust, you can compare the effects of market volatilities on Vanguard Dividend 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 Dividend with a short position of Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Dividend and Dimensional ETF.
Diversification Opportunities for Vanguard Dividend and Dimensional ETF
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Dimensional is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Dividend Appreciation 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 Dividend 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 Dividend Appreciation 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 Dividend i.e., Vanguard Dividend and Dimensional ETF go up and down completely randomly.
Pair Corralation between Vanguard Dividend and Dimensional ETF
Considering the 90-day investment horizon Vanguard Dividend is expected to generate 1.23 times less return on investment than Dimensional ETF. But when comparing it to its historical volatility, Vanguard Dividend Appreciation is 1.11 times less risky than Dimensional ETF. It trades about 0.08 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,461 in Dimensional ETF Trust on August 23, 2024 and sell it today you would earn a total of 991.00 from holding Dimensional ETF Trust or generate 40.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Dividend Appreciation vs. Dimensional ETF Trust
Performance |
| Timeline |
| Vanguard Dividend |
| Dimensional ETF Trust |
Vanguard Dividend and Dimensional ETF Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Dividend and Dimensional ETF
The main advantage of trading using opposite Vanguard Dividend and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Dividend 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 Dividend vs. Vanguard High Dividend | Vanguard Dividend vs. Vanguard Real Estate | Vanguard Dividend vs. Schwab Dividend Equity | Vanguard Dividend vs. Vanguard Growth Index |
| Dimensional ETF vs. iShares ESG Aware | Dimensional ETF vs. iShares ESG Aware | Dimensional ETF vs. Vanguard ESG Stock | Dimensional ETF vs. HUMANA INC |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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