Correlation Between FT Cboe and Dimensional International

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

By analyzing existing cross correlation between FT Cboe Vest and Dimensional International High, you can compare the effects of market volatilities on FT Cboe and Dimensional International 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 FT Cboe with a short position of Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and Dimensional International.

Diversification Opportunities for FT Cboe and Dimensional International

-0.31

Correlation Coefficient

FT Cboe  Dimensional International

Very good diversification

The 3 months correlation between DJUN and Dimensional is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and Dimensional International High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International and FT Cboe 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 FT Cboe Vest are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of FT Cboe i.e., FT Cboe and Dimensional International go up and down completely randomly.

Pair Corralation between FT Cboe and Dimensional International

Given the investment horizon of 90 days FT Cboe Vest is expected to under-perform the Dimensional International. But the etf apears to be less risky and, when comparing its historical volatility, FT Cboe Vest is 1.11 times less risky than Dimensional International. The etf trades about -0.09 of its potential returns per unit of risk. The Dimensional International High is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,515  in Dimensional International High on December 30, 2024 and sell it today you would earn a total of  197.00  from holding Dimensional International High or generate 7.83% return on investment over 90 days.

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

FT Cboe Vest  vs.  Dimensional International High

FT Cboe Vest

Risk-Adjusted Performance

Very Weak

Over the last 90 days FT Cboe Vest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, FT Cboe is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Dimensional International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional International High are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical indicators, Dimensional International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with FT Cboe and Dimensional International

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

The idea behind FT Cboe Vest and Dimensional International High 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.