Correlation Between Dodge International and Ab International
Can any of the company-specific risk be diversified away by investing in both Dodge International and Ab International 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 Dodge International and Ab International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge International Stock and Ab International Value, you can compare the effects of market volatilities on Dodge International and Ab International 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 Dodge International with a short position of Ab International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge International and Ab International.
Diversification Opportunities for Dodge International and Ab International
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and ABIYX is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Ab International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab International Value and Dodge International 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 Dodge International Stock are associated (or correlated) with Ab International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab International Value has no effect on the direction of Dodge International i.e., Dodge International and Ab International go up and down completely randomly.
Pair Corralation between Dodge International and Ab International
Assuming the 90 days horizon Dodge International Stock is expected to generate 0.87 times more return on investment than Ab International. However, Dodge International Stock is 1.15 times less risky than Ab International. It trades about 0.06 of its potential returns per unit of risk. Ab International Value is currently generating about 0.02 per unit of risk. If you would invest 4,631 in Dodge International Stock on September 12, 2024 and sell it today you would earn a total of 696.00 from holding Dodge International Stock or generate 15.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge International Stock vs. Ab International Value
Performance |
| Timeline |
| Dodge International Stock |
| Ab International Value |
Dodge International and Ab International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge International and Ab International
The main advantage of trading using opposite Dodge International and Ab International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge International position performs unexpectedly, Ab International 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 Ab International will offset losses from the drop in Ab International's long position.| Dodge International vs. Dodge Stock Fund | Dodge International vs. Dodge Income Fund | Dodge International vs. Dodge Balanced Fund | Dodge International vs. The Fairholme Fund |
| Ab International vs. Oakmark International Fund | Ab International vs. Dodge International Stock | Ab International vs. Oakmark International Fund | Ab International vs. Oakmark International 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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