Correlation Between Dimensional 2015 and Us Large

Can any of the company-specific risk be diversified away by investing in both Dimensional 2015 and Us Large 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 2015 and Us Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dimensional 2015 Target and Us Large Cap, you can compare the effects of market volatilities on Dimensional 2015 and Us Large 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 2015 with a short position of Us Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional 2015 and Us Large.

Diversification Opportunities for Dimensional 2015 and Us Large

0.8

Correlation Coefficient

Dimensional 2015  Us Large

Very poor diversification

The 3 months correlation between Dimensional and DFUVX is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional 2015 Target and Us Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Large Cap and Dimensional 2015 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 2015 Target are associated (or correlated) with Us Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Large Cap has no effect on the direction of Dimensional 2015 i.e., Dimensional 2015 and Us Large go up and down completely randomly.

Pair Corralation between Dimensional 2015 and Us Large

Assuming the 90 days horizon Dimensional 2015 Target is expected to under-perform the Us Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dimensional 2015 Target is 2.01 times less risky than Us Large. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Us Large Cap is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,243  in Us Large Cap on October 25, 2024 and sell it today you would earn a total of  67.00  from holding Us Large Cap or generate 2.07% return on investment over 90 days.

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

Dimensional 2015 Target  vs.  Us Large Cap

Dimensional 2015 Target

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dimensional 2015 Target has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Dimensional 2015 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Us Large Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Us Large Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Us Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dimensional 2015 and Us Large

The main advantage of trading using opposite Dimensional 2015 and Us Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional 2015 position performs unexpectedly, Us Large 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 Us Large will offset losses from the drop in Us Large's long position.

The idea behind Dimensional 2015 Target and Us Large Cap 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.