Correlation Between Small-cap Value and Dimensional Retirement
Can any of the company-specific risk be diversified away by investing in both Small-cap Value 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 Small-cap Value and Dimensional Retirement into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Cap Value Fund and Dimensional Retirement Income, you can compare the effects of market volatilities on Small-cap Value 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 Small-cap Value with a short position of Dimensional Retirement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small-cap Value and Dimensional Retirement.
Diversification Opportunities for Small-cap Value and Dimensional Retirement
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Small-cap and Dimensional is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Small Cap Value Fund and Dimensional Retirement Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Retirement and Small-cap Value 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 Small Cap Value Fund 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 Small-cap Value i.e., Small-cap Value and Dimensional Retirement go up and down completely randomly.
Pair Corralation between Small-cap Value and Dimensional Retirement
Assuming the 90 days horizon Small Cap Value Fund is expected to generate 7.15 times more return on investment than Dimensional Retirement. However, Small-cap Value is 7.15 times more volatile than Dimensional Retirement Income. It trades about 0.16 of its potential returns per unit of risk. Dimensional Retirement Income is currently generating about 0.35 per unit of risk. If you would invest 3,443 in Small Cap Value Fund on June 8, 2025 and sell it today you would earn a total of 427.00 from holding Small Cap Value Fund or generate 12.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Cap Value Fund vs. Dimensional Retirement Income
Performance |
| Timeline |
| Small Cap Value |
| Dimensional Retirement |
Small-cap Value and Dimensional Retirement Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small-cap Value and Dimensional Retirement
The main advantage of trading using opposite Small-cap Value and Dimensional Retirement positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small-cap Value 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.| Small-cap Value vs. Aggressive Investors 1 | Small-cap Value vs. Bridgeway Global Opportunities | Small-cap Value vs. Ultra Small Pany Market | Small-cap Value vs. Ultra Small Pany Fund |
| Dimensional Retirement vs. Leader Short Term Bond | Dimensional Retirement vs. Barings Active Short | Dimensional Retirement vs. Ashmore Emerging Markets | Dimensional Retirement vs. Victory Diversified Stock |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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