Correlation Between Dimensional Targeted and SPDR SSGA

Can any of the company-specific risk be diversified away by investing in both Dimensional Targeted and SPDR SSGA 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 SPDR SSGA 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 SPDR SSGA Small, you can compare the effects of market volatilities on Dimensional Targeted and SPDR SSGA 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 SPDR SSGA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional Targeted and SPDR SSGA.

Diversification Opportunities for Dimensional Targeted and SPDR SSGA

0.91

Correlation Coefficient

Dimensional Targeted  SPDR SSGA

Almost no diversification

The 3 months correlation between Dimensional and SPDR is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional Targeted Value and SPDR SSGA Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR SSGA 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 SPDR SSGA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR SSGA Small has no effect on the direction of Dimensional Targeted i.e., Dimensional Targeted and SPDR SSGA go up and down completely randomly.

Pair Corralation between Dimensional Targeted and SPDR SSGA

Given the investment horizon of 90 days Dimensional Targeted Value is expected to generate 1.02 times more return on investment than SPDR SSGA. However, Dimensional Targeted is 1.02 times more volatile than SPDR SSGA Small. It trades about 0.09 of its potential returns per unit of risk. SPDR SSGA Small is currently generating about 0.01 per unit of risk. If you would invest  5,306  in Dimensional Targeted Value on May 17, 2025 and sell it today you would earn a total of  343.00  from holding Dimensional Targeted Value or generate 6.46% 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.  SPDR SSGA Small

Dimensional Targeted

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional Targeted Value are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Dimensional Targeted may actually be approaching a critical reversion point that can send shares even higher in September 2025.

SPDR SSGA Small

Risk-Adjusted Performance

Weakest

Over the last 90 days SPDR SSGA Small has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable essential indicators, SPDR SSGA is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Dimensional Targeted and SPDR SSGA

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

The idea behind Dimensional Targeted Value and SPDR SSGA 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.