Correlation Between Dimensional World and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Dimensional World and IShares MSCI 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 IShares MSCI 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 iShares MSCI Intl, you can compare the effects of market volatilities on Dimensional World and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional World and IShares MSCI.
Diversification Opportunities for Dimensional World and IShares MSCI
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dimensional and IShares is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional World ex and iShares MSCI Intl in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Intl 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Intl has no effect on the direction of Dimensional World i.e., Dimensional World and IShares MSCI go up and down completely randomly.
Pair Corralation between Dimensional World and IShares MSCI
Given the investment horizon of 90 days Dimensional World ex is expected to generate 0.91 times more return on investment than IShares MSCI. However, Dimensional World ex is 1.1 times less risky than IShares MSCI. It trades about 0.16 of its potential returns per unit of risk. iShares MSCI Intl is currently generating about 0.09 per unit of risk. If you would invest 2,870 in Dimensional World ex on June 7, 2025 and sell it today you would earn a total of 186.00 from holding Dimensional World ex or generate 6.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dimensional World ex vs. iShares MSCI Intl
Performance |
| Timeline |
| Dimensional World |
| iShares MSCI Intl |
Dimensional World and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dimensional World and IShares MSCI
The main advantage of trading using opposite Dimensional World and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional World position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI's long position.| Dimensional World vs. Dimensional Core Equity | Dimensional World vs. Dimensional Targeted Value | Dimensional World vs. Dimensional International Value | Dimensional World vs. Dimensional Small Cap |
| IShares MSCI vs. iShares MSCI Intl | IShares MSCI vs. iShares Edge MSCI | IShares MSCI vs. iShares MSCI Emerging | IShares MSCI vs. iShares MSCI 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 the Global Correlations module to find global opportunities by holding instruments from different markets.
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