Correlation Between WBI BullBear and Dimensional ETF

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

By analyzing existing cross correlation between WBI BullBear Quality and Dimensional ETF Trust, you can compare the effects of market volatilities on WBI BullBear and Dimensional ETF 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 WBI BullBear with a short position of Dimensional ETF. Check out your portfolio center. Please also check ongoing floating volatility patterns of WBI BullBear and Dimensional ETF.

Diversification Opportunities for WBI BullBear and Dimensional ETF

0.09

Correlation Coefficient

WBI BullBear  Dimensional ETF

Significant diversification

The 3 months correlation between WBI and Dimensional is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding WBI BullBear Quality and Dimensional ETF Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional ETF Trust and WBI BullBear 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 WBI BullBear Quality are associated (or correlated) with Dimensional ETF. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional ETF Trust has no effect on the direction of WBI BullBear i.e., WBI BullBear and Dimensional ETF go up and down completely randomly.

Pair Corralation between WBI BullBear and Dimensional ETF

Given the investment horizon of 90 days WBI BullBear Quality is expected to generate 0.87 times more return on investment than Dimensional ETF. However, WBI BullBear Quality is 1.15 times less risky than Dimensional ETF. It trades about 0.07 of its potential returns per unit of risk. Dimensional ETF Trust is currently generating about 0.04 per unit of risk. If you would invest  2,780  in WBI BullBear Quality on October 21, 2024 and sell it today you would earn a total of  774.00  from holding WBI BullBear Quality or generate 27.84% return on investment over 90 days.

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

WBI BullBear Quality  vs.  Dimensional ETF Trust

WBI BullBear Quality

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in WBI BullBear Quality are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward indicators, WBI BullBear is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

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 fairly stable basic indicators, Dimensional ETF is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with WBI BullBear and Dimensional ETF

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

The idea behind WBI BullBear Quality and Dimensional ETF Trust 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.