Correlation Between Dimensional International and 2023 EFT

Can any of the company-specific risk be diversified away by investing in both Dimensional International and 2023 EFT 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 Dimensional International and 2023 EFT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dimensional International High and 2023 EFT Series, you can compare the effects of market volatilities on Dimensional International and 2023 EFT 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 Dimensional International with a short position of 2023 EFT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and 2023 EFT.

Diversification Opportunities for Dimensional International and 2023 EFT

-0.53

Correlation Coefficient

Dimensional International  2023 EFT

Excellent diversification

The 3 months correlation between Dimensional and 2023 is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and 2023 EFT Series in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2023 EFT Series and Dimensional International 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 Dimensional International High are associated (or correlated) with 2023 EFT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2023 EFT Series has no effect on the direction of Dimensional International i.e., Dimensional International and 2023 EFT go up and down completely randomly.

Pair Corralation between Dimensional International and 2023 EFT

Given the investment horizon of 90 days Dimensional International High is expected to under-perform the 2023 EFT. But the etf apears to be less risky and, when comparing its historical volatility, Dimensional International High is 1.0 times less risky than 2023 EFT. The etf trades about -0.06 of its potential returns per unit of risk. The 2023 EFT Series is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  3,145  in 2023 EFT Series on September 2, 2024 and sell it today you would earn a total of  248.00  from holding 2023 EFT Series or generate 7.89% return on investment over 90 days.

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

Dimensional International High  vs.  2023 EFT Series

Dimensional International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional International High has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical indicators, Dimensional International is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

2023 EFT Series

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days 2023 EFT Series has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat weak basic indicators, 2023 EFT may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dimensional International and 2023 EFT

The main advantage of trading using opposite Dimensional International and 2023 EFT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional International position performs unexpectedly, 2023 EFT 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 2023 EFT will offset losses from the drop in 2023 EFT's long position.

The idea behind Dimensional International High and 2023 EFT Series 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.