Correlation Between Dimensional International and WBI BullBear

Can any of the company-specific risk be diversified away by investing in both Dimensional International and WBI BullBear 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 WBI BullBear 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 WBI BullBear Value, you can compare the effects of market volatilities on Dimensional International and WBI BullBear 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 WBI BullBear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional International and WBI BullBear.

Diversification Opportunities for Dimensional International and WBI BullBear

-0.5

Correlation Coefficient

Dimensional International  WBI BullBear

Very good diversification

The 3 months correlation between Dimensional and WBI is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional International High and WBI BullBear Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WBI BullBear Value 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 WBI BullBear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WBI BullBear Value has no effect on the direction of Dimensional International i.e., Dimensional International and WBI BullBear go up and down completely randomly.

Pair Corralation between Dimensional International and WBI BullBear

Given the investment horizon of 90 days Dimensional International is expected to generate 21.65 times less return on investment than WBI BullBear. But when comparing it to its historical volatility, Dimensional International High is 1.06 times less risky than WBI BullBear. It trades about 0.02 of its potential returns per unit of risk. WBI BullBear Value is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest  2,883  in WBI BullBear Value on September 2, 2024 and sell it today you would earn a total of  187.00  from holding WBI BullBear Value or generate 6.49% 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.  WBI BullBear Value

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.

WBI BullBear Value

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WBI BullBear Value are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward indicators, WBI BullBear is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dimensional International and WBI BullBear

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

The idea behind Dimensional International High and WBI BullBear Value 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.