Correlation Between Dimensional World and Total Intl

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Can any of the company-specific risk be diversified away by investing in both Dimensional World and Total Intl 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 World and Total Intl into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dimensional World Ex and Total Intl Stock, you can compare the effects of market volatilities on Dimensional World and Total Intl 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 World with a short position of Total Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional World and Total Intl.

Diversification Opportunities for Dimensional World and Total Intl

0.99
  Correlation Coefficient

No risk reduction

The 1 month correlation between Dimensional and Total is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional World Ex and Total Intl Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Intl Stock and Dimensional World 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 World Ex are associated (or correlated) with Total Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Intl Stock has no effect on the direction of Dimensional World i.e., Dimensional World and Total Intl go up and down completely randomly.

Pair Corralation between Dimensional World and Total Intl

Given the investment horizon of 90 days Dimensional World Ex is expected to under-perform the Total Intl. But the etf apears to be less risky and, when comparing its historical volatility, Dimensional World Ex is 1.01 times less risky than Total Intl. The etf trades about -0.13 of its potential returns per unit of risk. The Total Intl Stock is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  5,597  in Total Intl Stock on March 26, 2022 and sell it today you would lose (377.00)  from holding Total Intl Stock or give up 6.74% of portfolio value over 90 days.
Time Period1 Month [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Dimensional World Ex  vs.  Total Intl Stock

 Performance (%) 
      Timeline 
Dimensional World 
Dimensional Performance
0 of 100
Over the last 90 days Dimensional World Ex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Etf's basic indicators remain fairly strong which may send shares a bit higher in July 2022. The current disturbance may also be a sign of long term up-swing for the ETF investors.

Dimensional Price Channel

Total Intl Stock 
Total Performance
0 of 100
Over the last 90 days Total Intl Stock has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Etf's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the ETF retail investors.

Total Price Channel

Dimensional World and Total Intl Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Dimensional World and Total Intl

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

Dimensional World Ex

Pair trading matchups for Dimensional World

The idea behind Dimensional World Ex and Total Intl Stock 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.

Total Intl Stock

Pair trading matchups for Total Intl

Check out your portfolio center. 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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