Correlation Between Dimensional 2045 and World Core

Can any of the company-specific risk be diversified away by investing in both Dimensional 2045 and World 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 Dimensional 2045 and World Core into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dimensional 2045 Target and World Core Equity, you can compare the effects of market volatilities on Dimensional 2045 and World 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 Dimensional 2045 with a short position of World Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dimensional 2045 and World Core.

Diversification Opportunities for Dimensional 2045 and World Core

1.0

Correlation Coefficient

Dimensional 2045  World Core

No risk reduction

The 3 months correlation between Dimensional and World is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Dimensional 2045 Target and World Core Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Core Equity and Dimensional 2045 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 2045 Target are associated (or correlated) with World Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Core Equity has no effect on the direction of Dimensional 2045 i.e., Dimensional 2045 and World Core go up and down completely randomly.

Pair Corralation between Dimensional 2045 and World Core

Assuming the 90 days horizon Dimensional 2045 is expected to generate 1.22 times less return on investment than World Core. But when comparing it to its historical volatility, Dimensional 2045 Target is 1.23 times less risky than World Core. It trades about 0.4 of its potential returns per unit of risk. World Core Equity is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest  2,250  in World Core Equity on April 20, 2025 and sell it today you would earn a total of  421.00  from holding World Core Equity or generate 18.71% return on investment over 90 days.

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

Dimensional 2045 Target  vs.  World Core Equity

Dimensional 2045 Target

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional 2045 Target are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Dimensional 2045 showed solid returns over the last few months and may actually be approaching a breakup point.

World Core Equity

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in World Core Equity are ranked lower than 31 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, World Core showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dimensional 2045 and World Core

The main advantage of trading using opposite Dimensional 2045 and World Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dimensional 2045 position performs unexpectedly, World 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 World Core will offset losses from the drop in World Core's long position.

The idea behind Dimensional 2045 Target and World 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.