Correlation Between Dimensional Global and Betashares Asia

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

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

Diversification Opportunities for Dimensional Global and Betashares Asia

0.64

Correlation Coefficient

Dimensional Global  Betashares Asia

Poor diversification

The 3 months correlation between Dimensional and Betashares is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Global Core and Betashares Asia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Asia Tech and Dimensional Global 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 Global Core are associated (or correlated) with Betashares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Asia Tech has no effect on the direction of Dimensional Global i.e., Dimensional Global and Betashares Asia go up and down completely randomly.

Pair Corralation between Dimensional Global and Betashares Asia

Assuming the 90 days trading horizon Dimensional Global Core is expected to under-perform the Betashares Asia. But the etf apears to be less risky and, when comparing its historical volatility, Dimensional Global Core is 2.1 times less risky than Betashares Asia. The etf trades about -0.11 of its potential returns per unit of risk. The Betashares Asia Technology is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest  1,036  in Betashares Asia Technology on December 5, 2024 and sell it today you would earn a total of  82.00  from holding Betashares Asia Technology or generate 7.92% return on investment over 90 days.

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

Dimensional Global Core  vs.  Betashares Asia Technology

Dimensional Global Core

Risk-Adjusted Performance

Weak

Over the last 90 days Dimensional Global Core has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Dimensional Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Betashares Asia Tech

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Betashares Asia Technology are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Betashares Asia unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dimensional Global and Betashares Asia

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

The idea behind Dimensional Global Core and Betashares Asia Technology 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.