Correlation Between Dimensional 2055 and Dimensional 2040

Can any of the company-specific risk be diversified away by investing in both Dimensional 2055 and Dimensional 2040 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 2055 and Dimensional 2040 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dimensional 2055 Target and Dimensional 2040 Target, you can compare the effects of market volatilities on Dimensional 2055 and Dimensional 2040 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 2055 with a short position of Dimensional 2040. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional 2055 and Dimensional 2040.

Diversification Opportunities for Dimensional 2055 and Dimensional 2040

0.91

Correlation Coefficient

Dimensional 2055  Dimensional 2040

Almost no diversification

The 3 months correlation between Dimensional and Dimensional is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional 2055 Target and Dimensional 2040 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2040 Target and Dimensional 2055 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 2055 Target are associated (or correlated) with Dimensional 2040. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2040 Target has no effect on the direction of Dimensional 2055 i.e., Dimensional 2055 and Dimensional 2040 go up and down completely randomly.

Pair Corralation between Dimensional 2055 and Dimensional 2040

Assuming the 90 days horizon Dimensional 2055 Target is expected to generate 1.26 times more return on investment than Dimensional 2040. However, Dimensional 2055 is 1.26 times more volatile than Dimensional 2040 Target. It trades about 0.18 of its potential returns per unit of risk. Dimensional 2040 Target is currently generating about 0.14 per unit of risk. If you would invest  1,901  in Dimensional 2055 Target on September 5, 2024 and sell it today you would earn a total of  137.00  from holding Dimensional 2055 Target or generate 7.21% return on investment over 90 days.

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

Dimensional 2055 Target  vs.  Dimensional 2040 Target

Dimensional 2055 Target

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional 2055 Target are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Dimensional 2055 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dimensional 2040 Target

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional 2040 Target are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical indicators, Dimensional 2040 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dimensional 2055 and Dimensional 2040

The main advantage of trading using opposite Dimensional 2055 and Dimensional 2040 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional 2055 position performs unexpectedly, Dimensional 2040 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 2040 will offset losses from the drop in Dimensional 2040's long position.

The idea behind Dimensional 2055 Target and Dimensional 2040 Target 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.