Correlation Between Volatility Shares and Dimensional ETF
Can any of the company-specific risk be diversified away by investing in both Volatility Shares and Dimensional 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 Volatility Shares and Dimensional ETF into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volatility Shares Trust and Dimensional ETF Trust, you can compare the effects of market volatilities on Volatility Shares and Dimensional 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 Volatility Shares with a short position of Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volatility Shares and Dimensional ETF.
Diversification Opportunities for Volatility Shares and Dimensional ETF
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Volatility and Dimensional is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Volatility Shares Trust and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust and Volatility Shares 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 Volatility Shares Trust are associated (or correlated) with Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of Volatility Shares i.e., Volatility Shares and Dimensional ETF go up and down completely randomly.
Pair Corralation between Volatility Shares and Dimensional ETF
Given the investment horizon of 90 days Volatility Shares Trust is expected to generate 28.4 times more return on investment than Dimensional ETF. However, Volatility Shares is 28.4 times more volatile than Dimensional ETF Trust. It trades about 0.2 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about -0.16 per unit of risk. If you would invest 2,516 in Volatility Shares Trust on October 9, 2024 and sell it today you would earn a total of 2,922 from holding Volatility Shares Trust or generate 116.14% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Volatility Shares Trust vs. Dimensional ETF Trust
Performance |
Timeline |
Volatility Shares Trust |
Dimensional ETF Trust |
Volatility Shares and Dimensional ETF Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Volatility Shares and Dimensional ETF
The main advantage of trading using opposite Volatility Shares and Dimensional ETF positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volatility Shares position performs unexpectedly, Dimensional 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 Dimensional ETF will offset losses from the drop in Dimensional ETF's long position.Volatility Shares vs. ProShares Trust | Volatility Shares vs. iShares Ethereum Trust | Volatility Shares vs. ProShares Trust | Volatility Shares vs. Grayscale Ethereum Trust |
Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional ETF Trust | Dimensional ETF vs. Dimensional Core Equity |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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