Previously, we had DCA to move periodically from a fixed amount of cash to equity.
When moving from a fixed amount of equity to cash, the equivalent of DCA (dollar sell averaging??) seems to be to sell a constant number of shares periodically. (There have been other posts on that.)
In the first case, you have the cash and can always buy the shares (assume fractional shares are possible.) If you adjust the cash you spend (e.g., via Value cost averaging) you may sometimes not have the cash available.
In the second case, if you sell a variable number of shares to meet a cash point, you may come to a point where you don't have enough shares to make that. If you sell a fixed proportion of the shares, you can always sell.
Now let's throw in another variable. I have an ETF that I am going to sell and a stock I am going to buy. The ETF shares can either be correlated with the stock, or not.
What is the minimum risk strategy for making the transfer?
1. If the two equities are correlated, do I sell a fixed number of ETF shares or a fixed value of ETF shares? The cash obtained is used to purchase the stock.
2. If the two equities are not correlated, do I sell a fixed number of ETF shares or a fixed value of ETF shares? The cash obtained is used to purchase the stock.
I suspect I need to write a program to simulate the various scenarios in order to answer this correctly. My intuition is leading me nowhere.