Correlation Between Dimensional ETF and Schwab Fundamental

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

Diversification Opportunities for Dimensional ETF and Schwab Fundamental

0.98

Correlation Coefficient

Dimensional ETF  Schwab Fundamental

Almost no diversification

The 3 months correlation between Dimensional and Schwab is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Schwab Fundamental Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schwab Fundamental 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 Schwab Fundamental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schwab Fundamental has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Schwab Fundamental go up and down completely randomly.

Pair Corralation between Dimensional ETF and Schwab Fundamental

Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 1.11 times more return on investment than Schwab Fundamental. However, Dimensional ETF is 1.11 times more volatile than Schwab Fundamental International. It trades about 0.03 of its potential returns per unit of risk. Schwab Fundamental International is currently generating about 0.03 per unit of risk. If you would invest  2,290  in Dimensional ETF Trust on October 15, 2024 and sell it today you would earn a total of  321.00  from holding Dimensional ETF Trust or generate 14.02% 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.  Schwab Fundamental Internation

Dimensional ETF Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional ETF Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Etf's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the fund sophisticated investors.

Schwab Fundamental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schwab Fundamental International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Etf's fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the Exchange Traded Fund stockholders.

Pair Trading with Dimensional ETF and Schwab Fundamental

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

The idea behind Dimensional ETF Trust and Schwab Fundamental International 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.