Correlation Between Dimensional Core and Unusual Whales

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

Diversification Opportunities for Dimensional Core and Unusual Whales

0.93

Correlation Coefficient

Dimensional Core  Unusual Whales

Almost no diversification

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

Pair Corralation between Dimensional Core and Unusual Whales

Given the investment horizon of 90 days Dimensional Core Equity is expected to under-perform the Unusual Whales. But the etf apears to be less risky and, when comparing its historical volatility, Dimensional Core Equity is 1.18 times less risky than Unusual Whales. The etf trades about -0.22 of its potential returns per unit of risk. The Unusual Whales Subversive is currently generating about -0.19 of returns per unit of risk over similar time horizon. If you would invest  3,993  in Unusual Whales Subversive on October 14, 2024 and sell it today you would lose (163.00) from holding Unusual Whales Subversive or give up 4.08% of portfolio value over 90 days.

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

Dimensional Core Equity  vs.  Unusual Whales Subversive

Dimensional Core Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional Core Equity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Dimensional Core is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Unusual Whales Subversive

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Unusual Whales Subversive has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Unusual Whales is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Dimensional Core and Unusual Whales

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

The idea behind Dimensional Core Equity and Unusual Whales Subversive 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.