Correlation Between Dimensional International and Roundhill ETF

Can any of the company-specific risk be diversified away by investing in both Dimensional International and Roundhill 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 Dimensional International and Roundhill ETF 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 Roundhill ETF Trust, you can compare the effects of market volatilities on Dimensional International and Roundhill 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 Dimensional International with a short position of Roundhill ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and Roundhill ETF.

Diversification Opportunities for Dimensional International and Roundhill ETF

-0.66

Correlation Coefficient

Dimensional International  Roundhill ETF

Excellent diversification

The 3 months correlation between Dimensional and Roundhill is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and Roundhill ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roundhill ETF Trust 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 Roundhill ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roundhill ETF Trust has no effect on the direction of Dimensional International i.e., Dimensional International and Roundhill ETF go up and down completely randomly.

Pair Corralation between Dimensional International and Roundhill ETF

Given the investment horizon of 90 days Dimensional International is expected to generate 5.34 times less return on investment than Roundhill ETF. But when comparing it to its historical volatility, Dimensional International High is 1.31 times less risky than Roundhill ETF. It trades about 0.02 of its potential returns per unit of risk. Roundhill ETF Trust is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,515  in Roundhill ETF Trust on September 24, 2024 and sell it today you would earn a total of  610.00  from holding Roundhill ETF Trust or generate 17.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	57.22%
Values	Daily Returns

Dimensional International High  vs.  Roundhill ETF Trust

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 latest unfluctuating performance, the Etf's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Roundhill ETF Trust

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Roundhill ETF Trust are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Roundhill ETF is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dimensional International and Roundhill ETF

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

The idea behind Dimensional International High and Roundhill 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.

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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.