Correlation Between Dimensional ETF and Goldman Sachs

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

Diversification Opportunities for Dimensional ETF and Goldman Sachs

-0.71

Correlation Coefficient

Dimensional ETF  Goldman Sachs

Pay attention - limited upside

The 3 months correlation between Dimensional and Goldman is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Goldman Sachs ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs ETF 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 Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs ETF has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Goldman Sachs go up and down completely randomly.

Pair Corralation between Dimensional ETF and Goldman Sachs

Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 0.74 times more return on investment than Goldman Sachs. However, Dimensional ETF Trust is 1.36 times less risky than Goldman Sachs. It trades about 0.23 of its potential returns per unit of risk. Goldman Sachs ETF is currently generating about -0.11 per unit of risk. If you would invest  2,641  in Dimensional ETF Trust on December 23, 2024 and sell it today you would earn a total of  338.00  from holding Dimensional ETF Trust or generate 12.8% return on investment over 90 days.

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

Dimensional ETF Trust  vs.  Goldman Sachs ETF

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. In spite of fairly abnormal basic indicators, Dimensional ETF showed solid returns over the last few months and may actually be approaching a breakup point.

Goldman Sachs ETF

Risk-Adjusted Performance

Very Weak

Over the last 90 days Goldman Sachs ETF 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 sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Pair Trading with Dimensional ETF and Goldman Sachs

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

The idea behind Dimensional ETF Trust and Goldman Sachs ETF 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.