Correlation Between Avantis Us and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Avantis Us and Dodge Cox 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 Avantis Us and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Avantis Large Cap and Dodge Cox Stock, you can compare the effects of market volatilities on Avantis Us and Dodge Cox 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 Avantis Us with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Avantis Us and Dodge Cox.
Diversification Opportunities for Avantis Us and Dodge Cox
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Avantis and Dodge is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Avantis Large Cap and Dodge Cox Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox Stock and Avantis Us 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 Avantis Large Cap are associated (or correlated) with Dodge Cox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Cox Stock has no effect on the direction of Avantis Us i.e., Avantis Us and Dodge Cox go up and down completely randomly.
Pair Corralation between Avantis Us and Dodge Cox
Assuming the 90 days horizon Avantis Large Cap is expected to generate 1.17 times more return on investment than Dodge Cox. However, Avantis Us is 1.17 times more volatile than Dodge Cox Stock. It trades about 0.23 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.2 per unit of risk. If you would invest 1,415 in Avantis Large Cap on September 3, 2024 and sell it today you would earn a total of 122.00 from holding Avantis Large Cap or generate 8.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Avantis Large Cap vs. Dodge Cox Stock
Performance |
| Timeline |
| Avantis Large Cap |
| Dodge Cox Stock |
Avantis Us and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Avantis Us and Dodge Cox
The main advantage of trading using opposite Avantis Us and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Avantis Us position performs unexpectedly, Dodge Cox 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 Dodge Cox will offset losses from the drop in Dodge Cox's long position.| Avantis Us vs. Aqr Long Short Equity | Avantis Us vs. Rbc Short Duration | Avantis Us vs. Goldman Sachs Short | Avantis Us vs. Ab Select Longshort |
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Check out your portfolio center.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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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