Correlation Between Financials Ultrasector and Dimensional 2055

Can any of the company-specific risk be diversified away by investing in both Financials Ultrasector and Dimensional 2055 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 Financials Ultrasector and Dimensional 2055 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Financials Ultrasector Profund and Dimensional 2055 Target, you can compare the effects of market volatilities on Financials Ultrasector and Dimensional 2055 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 Financials Ultrasector with a short position of Dimensional 2055. Check out your portfolio center. Please also check ongoing floating volatility patterns of Financials Ultrasector and Dimensional 2055.

Diversification Opportunities for Financials Ultrasector and Dimensional 2055

0.39

Correlation Coefficient

Financials Ultrasector  Dimensional 2055

Weak diversification

The 3 months correlation between Financials and Dimensional is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Financials Ultrasector Profund and Dimensional 2055 Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dimensional 2055 Target and Financials Ultrasector 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 Financials Ultrasector Profund are associated (or correlated) with Dimensional 2055. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dimensional 2055 Target has no effect on the direction of Financials Ultrasector i.e., Financials Ultrasector and Dimensional 2055 go up and down completely randomly.

Pair Corralation between Financials Ultrasector and Dimensional 2055

Assuming the 90 days horizon Financials Ultrasector Profund is expected to under-perform the Dimensional 2055. In addition to that, Financials Ultrasector is 2.12 times more volatile than Dimensional 2055 Target. It trades about -0.01 of its total potential returns per unit of risk. Dimensional 2055 Target is currently generating about 0.21 per unit of volatility. If you would invest  2,120  in Dimensional 2055 Target on July 31, 2025 and sell it today you would earn a total of  178.00  from holding Dimensional 2055 Target or generate 8.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Financials Ultrasector Profund  vs.  Dimensional 2055 Target

Financials Ultrasector

Risk-Adjusted Performance

Weak

Over the last 90 days Financials Ultrasector Profund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Financials Ultrasector is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dimensional 2055 Target

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dimensional 2055 Target are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Dimensional 2055 may actually be approaching a critical reversion point that can send shares even higher in November 2025.

Pair Trading with Financials Ultrasector and Dimensional 2055

The main advantage of trading using opposite Financials Ultrasector and Dimensional 2055 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Financials Ultrasector position performs unexpectedly, Dimensional 2055 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 2055 will offset losses from the drop in Dimensional 2055's long position.

The idea behind Financials Ultrasector Profund and Dimensional 2055 Target 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.