Correlation Between Applied Finance and Dimensional Retirement
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Dimensional Retirement 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 Applied Finance and Dimensional Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Dimensional Retirement Income, you can compare the effects of market volatilities on Applied Finance and Dimensional Retirement 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 Applied Finance with a short position of Dimensional Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Dimensional Retirement.
Diversification Opportunities for Applied Finance and Dimensional Retirement
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Applied and Dimensional is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Dimensional Retirement Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Retirement and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Dimensional Retirement. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Retirement has no effect on the direction of Applied Finance i.e., Applied Finance and Dimensional Retirement go up and down completely randomly.
Pair Corralation between Applied Finance and Dimensional Retirement
Assuming the 90 days horizon Applied Finance Explorer is expected to generate 6.2 times more return on investment than Dimensional Retirement. However, Applied Finance is 6.2 times more volatile than Dimensional Retirement Income. It trades about 0.19 of its potential returns per unit of risk. Dimensional Retirement Income is currently generating about 0.33 per unit of risk. If you would invest 2,105 in Applied Finance Explorer on June 3, 2025 and sell it today you would earn a total of 276.00 from holding Applied Finance Explorer or generate 13.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Dimensional Retirement Income
Performance |
| Timeline |
| Applied Finance Explorer |
| Dimensional Retirement |
Applied Finance and Dimensional Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Dimensional Retirement
The main advantage of trading using opposite Applied Finance and Dimensional Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Dimensional Retirement 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 Retirement will offset losses from the drop in Dimensional Retirement's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Dimensional Retirement vs. Intal High Relative | Dimensional Retirement vs. Dfa Inflation Protected | Dimensional Retirement vs. Dfa International Small | Dimensional Retirement vs. Dfa Mn Municipal |
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 the Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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