Correlation Between FT Cboe and Dimensional Core

Can any of the company-specific risk be diversified away by investing in both FT Cboe and Dimensional Core 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 FT Cboe and Dimensional Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FT Cboe Vest and Dimensional Core Equity, you can compare the effects of market volatilities on FT Cboe and Dimensional Core 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 FT Cboe with a short position of Dimensional Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of FT Cboe and Dimensional Core.

Diversification Opportunities for FT Cboe and Dimensional Core

0.99

Correlation Coefficient

FT Cboe  Dimensional Core

No risk reduction

The 3 months correlation between BUFD and Dimensional is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding FT Cboe Vest and Dimensional Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional Core Equity and FT Cboe 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 FT Cboe Vest are associated (or correlated) with Dimensional Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional Core Equity has no effect on the direction of FT Cboe i.e., FT Cboe and Dimensional Core go up and down completely randomly.

Pair Corralation between FT Cboe and Dimensional Core

Given the investment horizon of 90 days FT Cboe is expected to generate 1.57 times less return on investment than Dimensional Core. But when comparing it to its historical volatility, FT Cboe Vest is 2.01 times less risky than Dimensional Core. It trades about 0.23 of its potential returns per unit of risk. Dimensional Core Equity is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  3,465  in Dimensional Core Equity on May 17, 2025 and sell it today you would earn a total of  281.00  from holding Dimensional Core Equity or generate 8.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

FT Cboe Vest  vs.  Dimensional Core Equity

FT Cboe Vest

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in FT Cboe Vest are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, FT Cboe is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Dimensional Core Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Core Equity are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Dimensional Core may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with FT Cboe and Dimensional Core

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

The idea behind FT Cboe Vest and Dimensional Core Equity 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.

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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 AI Portfolio Prophet module to use AI to generate optimal portfolios and find profitable investment opportunities.