Correlation Between Vanguard International and Dimensional International
Can any of the company-specific risk be diversified away by investing in both Vanguard International and Dimensional International 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 Vanguard International and Dimensional International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard International High and Dimensional International Value, you can compare the effects of market volatilities on Vanguard International and Dimensional International 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 Vanguard International with a short position of Dimensional International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard International and Dimensional International.
Diversification Opportunities for Vanguard International and Dimensional International
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and Dimensional is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard International High and Dimensional International Valu in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional International and Vanguard International 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 Vanguard International High are associated (or correlated) with Dimensional International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional International has no effect on the direction of Vanguard International i.e., Vanguard International and Dimensional International go up and down completely randomly.
Pair Corralation between Vanguard International and Dimensional International
Given the investment horizon of 90 days Vanguard International is expected to generate 1.15 times less return on investment than Dimensional International. But when comparing it to its historical volatility, Vanguard International High is 1.06 times less risky than Dimensional International. It trades about 0.14 of its potential returns per unit of risk. Dimensional International Value is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 3,773 in Dimensional International Value on April 3, 2025 and sell it today you would earn a total of 542.00 from holding Dimensional International Value or generate 14.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard International High vs. Dimensional International Valu
Performance |
| Timeline |
| Vanguard International |
| Dimensional International |
Vanguard International and Dimensional International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard International and Dimensional International
The main advantage of trading using opposite Vanguard International and Dimensional International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard International position performs unexpectedly, Dimensional International 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 International will offset losses from the drop in Dimensional International's long position.| Vanguard International vs. Strategy Shares | Vanguard International vs. Freedom Day Dividend | Vanguard International vs. Franklin Templeton ETF | Vanguard International vs. iShares MSCI China |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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