Correlation Between Dimensional Targeted and 6 Meridian

Can any of the company-specific risk be diversified away by investing in both Dimensional Targeted and 6 Meridian 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 Targeted and 6 Meridian into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dimensional Targeted Value and 6 Meridian Small, you can compare the effects of market volatilities on Dimensional Targeted and 6 Meridian 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 Targeted with a short position of 6 Meridian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Targeted and 6 Meridian.

Diversification Opportunities for Dimensional Targeted and 6 Meridian

0.98

Correlation Coefficient

Dimensional Targeted  6 Meridian

Almost no diversification

The 3 months correlation between Dimensional and SIXS is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Targeted Value and 6 Meridian Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 6 Meridian Small and Dimensional Targeted 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 Targeted Value are associated (or correlated) with 6 Meridian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 6 Meridian Small has no effect on the direction of Dimensional Targeted i.e., Dimensional Targeted and 6 Meridian go up and down completely randomly.

Pair Corralation between Dimensional Targeted and 6 Meridian

Given the investment horizon of 90 days Dimensional Targeted Value is expected to generate 1.35 times more return on investment than 6 Meridian. However, Dimensional Targeted is 1.35 times more volatile than 6 Meridian Small. It trades about 0.18 of its potential returns per unit of risk. 6 Meridian Small is currently generating about 0.11 per unit of risk. If you would invest  4,929  in Dimensional Targeted Value on April 29, 2025 and sell it today you would earn a total of  682.00  from holding Dimensional Targeted Value or generate 13.84% return on investment over 90 days.

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

Dimensional Targeted Value  vs.  6 Meridian Small

Dimensional Targeted

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Targeted Value are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Dimensional Targeted unveiled solid returns over the last few months and may actually be approaching a breakup point.

6 Meridian Small

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 6 Meridian Small are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, 6 Meridian may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Dimensional Targeted and 6 Meridian

The main advantage of trading using opposite Dimensional Targeted and 6 Meridian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional Targeted position performs unexpectedly, 6 Meridian 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 6 Meridian will offset losses from the drop in 6 Meridian's long position.

The idea behind Dimensional Targeted Value and 6 Meridian Small 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.