Correlation Between Dimensional ETF and Optimize Strategy

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

By analyzing existing cross correlation between Dimensional ETF Trust and Optimize Strategy Index, you can compare the effects of market volatilities on Dimensional ETF and Optimize Strategy 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 ETF with a short position of Optimize Strategy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional ETF and Optimize Strategy.

Diversification Opportunities for Dimensional ETF and Optimize Strategy

0.86

Correlation Coefficient

Dimensional ETF  Optimize Strategy

Very poor diversification

The 3 months correlation between Dimensional and Optimize is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional ETF Trust and Optimize Strategy Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimize Strategy Index and Dimensional ETF 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 ETF Trust are associated (or correlated) with Optimize Strategy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimize Strategy Index has no effect on the direction of Dimensional ETF i.e., Dimensional ETF and Optimize Strategy go up and down completely randomly.

Pair Corralation between Dimensional ETF and Optimize Strategy

Given the investment horizon of 90 days Dimensional ETF Trust is expected to generate 0.18 times more return on investment than Optimize Strategy. However, Dimensional ETF Trust is 5.69 times less risky than Optimize Strategy. It trades about 0.01 of its potential returns per unit of risk. Optimize Strategy Index is currently generating about -0.03 per unit of risk. If you would invest  4,282  in Dimensional ETF Trust on August 3, 2025 and sell it today you would earn a total of  1.00  from holding Dimensional ETF Trust or generate 0.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.65%
Values	Daily Returns

Dimensional ETF Trust  vs.  Optimize Strategy Index

Dimensional ETF Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional ETF Trust are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable fundamental indicators, Dimensional ETF is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Optimize Strategy Index

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Optimize Strategy Index are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Optimize Strategy may actually be approaching a critical reversion point that can send shares even higher in December 2025.

Pair Trading with Dimensional ETF and Optimize Strategy

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

The idea behind Dimensional ETF Trust and Optimize Strategy Index 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.