Correlation Between Baron Small and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Baron Small 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 Baron Small and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baron Small Cap and Dodge International Stock, you can compare the effects of market volatilities on Baron Small 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 Baron Small with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baron Small and Dodge Cox.
Diversification Opportunities for Baron Small and Dodge Cox
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Baron and Dodge is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Baron Small Cap and Dodge International Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge International Stock and Baron Small 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 Baron Small 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 International Stock has no effect on the direction of Baron Small i.e., Baron Small and Dodge Cox go up and down completely randomly.
Pair Corralation between Baron Small and Dodge Cox
Assuming the 90 days horizon Baron Small Cap is expected to generate 1.44 times more return on investment than Dodge Cox. However, Baron Small is 1.44 times more volatile than Dodge International Stock. It trades about 0.07 of its potential returns per unit of risk. Dodge International Stock is currently generating about 0.05 per unit of risk. If you would invest 2,830 in Baron Small Cap on August 28, 2024 and sell it today you would earn a total of 907.00 from holding Baron Small Cap or generate 32.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baron Small Cap vs. Dodge International Stock
Performance |
| Timeline |
| Baron Small Cap |
| Dodge International Stock |
Baron Small and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baron Small and Dodge Cox
The main advantage of trading using opposite Baron Small and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baron Small 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.| Baron Small vs. Baron Growth Fund | Baron Small vs. Baron Asset Fund | Baron Small vs. Baron Partners Fund | Baron Small vs. Nasdaq 100 Fund Investor |
| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. The Fairholme Fund |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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