Correlation Between Dimensional Core and SmartETFs Asia

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

Diversification Opportunities for Dimensional Core and SmartETFs Asia

-0.07

Correlation Coefficient

Dimensional Core  SmartETFs Asia

Good diversification

The 3 months correlation between Dimensional and SmartETFs is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Core Equity and SmartETFs Asia Pacific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartETFs Asia Pacific 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 SmartETFs Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartETFs Asia Pacific has no effect on the direction of Dimensional Core i.e., Dimensional Core and SmartETFs Asia go up and down completely randomly.

Pair Corralation between Dimensional Core and SmartETFs Asia

Given the investment horizon of 90 days Dimensional Core Equity is expected to under-perform the SmartETFs Asia. In addition to that, Dimensional Core is 1.12 times more volatile than SmartETFs Asia Pacific. It trades about -0.09 of its total potential returns per unit of risk. SmartETFs Asia Pacific is currently generating about 0.02 per unit of volatility. If you would invest  1,537  in SmartETFs Asia Pacific on December 29, 2024 and sell it today you would earn a total of  13.00  from holding SmartETFs Asia Pacific or generate 0.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Dimensional Core Equity  vs.  SmartETFs Asia Pacific

Dimensional Core Equity

Risk-Adjusted Performance

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 comparatively stable basic indicators, Dimensional Core is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

SmartETFs Asia Pacific

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SmartETFs Asia Pacific are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, SmartETFs Asia 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 Dimensional Core and SmartETFs Asia

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

The idea behind Dimensional Core Equity and SmartETFs Asia Pacific 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.