Correlation Between Barloworld and Dimensional ETF

Can any of the company-specific risk be diversified away by investing in both Barloworld 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 Barloworld and Dimensional ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Barloworld Ltd ADR and Dimensional ETF Trust, you can compare the effects of market volatilities on Barloworld 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 Barloworld with a short position of Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barloworld and Dimensional ETF.

Diversification Opportunities for Barloworld and Dimensional ETF

-0.46

Correlation Coefficient

Barloworld  Dimensional ETF

Very good diversification

The 3 months correlation between Barloworld and Dimensional is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Barloworld Ltd ADR 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 Barloworld 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 Barloworld Ltd ADR 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 Barloworld i.e., Barloworld and Dimensional ETF go up and down completely randomly.

Pair Corralation between Barloworld and Dimensional ETF

Assuming the 90 days horizon Barloworld is expected to generate 1.06 times less return on investment than Dimensional ETF. In addition to that, Barloworld is 3.68 times more volatile than Dimensional ETF Trust. It trades about 0.0 of its total potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.02 per unit of volatility. If you would invest  2,518  in Dimensional ETF Trust on September 5, 2024 and sell it today you would earn a total of  19.00  from holding Dimensional ETF Trust or generate 0.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Barloworld Ltd ADR  vs.  Dimensional ETF Trust

Barloworld ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barloworld Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Barloworld is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dimensional ETF Trust

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional ETF Trust are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical indicators, Dimensional ETF is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Barloworld and Dimensional ETF

The main advantage of trading using opposite Barloworld and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barloworld 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 Barloworld Ltd ADR 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.