Correlation Between Dimensional ETF and Global X

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

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

Diversification Opportunities for Dimensional ETF and Global X

0.94

Correlation Coefficient

Dimensional ETF  Global X

Almost no diversification

The 3 months correlation between Dimensional and Global is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Global X Interest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global X Interest and Dimensional ETF 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 ETF Trust are associated (or correlated) with Global X. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global X Interest has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Global X go up and down completely randomly.

Pair Corralation between Dimensional ETF and Global X

Given the investment horizon of 90 days Dimensional ETF is expected to generate 1.08 times less return on investment than Global X. But when comparing it to its historical volatility, Dimensional ETF Trust is 1.34 times less risky than Global X. It trades about 0.24 of its potential returns per unit of risk. Global X Interest is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,985  in Global X Interest on December 30, 2024 and sell it today you would earn a total of  90.00  from holding Global X Interest or generate 4.53% return on investment over 90 days.

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

Dimensional ETF Trust  vs.  Global X Interest

Dimensional ETF Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional ETF Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable forward indicators, Dimensional ETF is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Global X Interest

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Global X Interest are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, Global X is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Dimensional ETF and Global X

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

The idea behind Dimensional ETF Trust and Global X Interest 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.