Correlation Between Global X and Dimensional International

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

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

Diversification Opportunities for Global X and Dimensional International

0.93

Correlation Coefficient

Global X  Dimensional International

Almost no diversification

The 3 months correlation between Global and Dimensional is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Global X Alternative and Dimensional International Valu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International and Global X 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 Global X Alternative are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of Global X i.e., Global X and Dimensional International go up and down completely randomly.

Pair Corralation between Global X and Dimensional International

Given the investment horizon of 90 days Global X is expected to generate 8.99 times less return on investment than Dimensional International. But when comparing it to its historical volatility, Global X Alternative is 1.47 times less risky than Dimensional International. It trades about 0.06 of its potential returns per unit of risk. Dimensional International Value is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest  3,665  in Dimensional International Value on December 5, 2024 and sell it today you would earn a total of  205.00  from holding Dimensional International Value or generate 5.59% return on investment over 90 days.

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

Global X Alternative  vs.  Dimensional International Valu

Global X Alternative

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Alternative are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Global X is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Dimensional International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional International Value are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, Dimensional International is not utilizing all of its potentials. The newest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Global X and Dimensional International

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

The idea behind Global X Alternative and Dimensional International 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.