Correlation Between Ab Municipal and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Ab Municipal 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 Ab Municipal and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Municipal Bond and Dodge Cox Income, you can compare the effects of market volatilities on Ab Municipal 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 Ab Municipal with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Dodge Cox.
Diversification Opportunities for Ab Municipal and Dodge Cox
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AUNTX and Dodge is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Dodge Cox Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox Income and Ab Municipal 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 Ab Municipal Bond 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 Income has no effect on the direction of Ab Municipal i.e., Ab Municipal and Dodge Cox go up and down completely randomly.
Pair Corralation between Ab Municipal and Dodge Cox
Assuming the 90 days horizon Ab Municipal is expected to generate 1.09 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, Ab Municipal Bond is 2.51 times less risky than Dodge Cox. It trades about 0.29 of its potential returns per unit of risk. Dodge Cox Income is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,236 in Dodge Cox Income on November 5, 2024 and sell it today you would earn a total of 10.00 from holding Dodge Cox Income or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ab Municipal Bond vs. Dodge Cox Income
Performance |
| Timeline |
| Ab Municipal Bond |
| Dodge Cox Income |
Ab Municipal and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Dodge Cox
The main advantage of trading using opposite Ab Municipal and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal 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.| Ab Municipal vs. Needham Aggressive Growth | Ab Municipal vs. One Choice Portfolio | Ab Municipal vs. Pace High Yield | Ab Municipal vs. Gugg Actv Invmt |
| Dodge Cox vs. Leader Short Term Bond | Dodge Cox vs. Fidelity Flex Servative | Dodge Cox vs. Transam Short Term Bond | Dodge Cox vs. Virtus Multi Sector Short |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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