Correlation Between Dimensional Core and IQ Candriam

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

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

Diversification Opportunities for Dimensional Core and IQ Candriam

0.95

Correlation Coefficient

Dimensional Core  IQ Candriam

Almost no diversification

The 3 months correlation between Dimensional and IQSU is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Core Equity and IQ Candriam ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IQ Candriam ESG and Dimensional Core 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 Core Equity are associated (or correlated) with IQ Candriam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IQ Candriam ESG has no effect on the direction of Dimensional Core i.e., Dimensional Core and IQ Candriam go up and down completely randomly.

Pair Corralation between Dimensional Core and IQ Candriam

Given the investment horizon of 90 days Dimensional Core is expected to generate 1.08 times less return on investment than IQ Candriam. In addition to that, Dimensional Core is 1.0 times more volatile than IQ Candriam ESG. It trades about 0.1 of its total potential returns per unit of risk. IQ Candriam ESG is currently generating about 0.11 per unit of volatility. If you would invest  3,206  in IQ Candriam ESG on September 5, 2024 and sell it today you would earn a total of  1,851  from holding IQ Candriam ESG or generate 57.74% return on investment over 90 days.

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

Dimensional Core Equity  vs.  IQ Candriam ESG

Dimensional Core Equity

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Core Equity are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, Dimensional Core may actually be approaching a critical reversion point that can send shares even higher in January 2025.

IQ Candriam ESG

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IQ Candriam ESG are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, IQ Candriam may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dimensional Core and IQ Candriam

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

The idea behind Dimensional Core Equity and IQ Candriam ESG 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.