Correlation Between Dodge Cox and Aim Taxexempt
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Aim Taxexempt 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 Cox and Aim Taxexempt 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 Aim Taxexempt Funds, you can compare the effects of market volatilities on Dodge Cox and Aim Taxexempt 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 Cox with a short position of Aim Taxexempt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Aim Taxexempt.
Diversification Opportunities for Dodge Cox and Aim Taxexempt
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Aim is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Aim Taxexempt Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aim Taxexempt Funds and Dodge Cox 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 Aim Taxexempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aim Taxexempt Funds has no effect on the direction of Dodge Cox i.e., Dodge Cox and Aim Taxexempt go up and down completely randomly.
Pair Corralation between Dodge Cox and Aim Taxexempt
Assuming the 90 days horizon Dodge International Stock is expected to generate 3.86 times more return on investment than Aim Taxexempt. However, Dodge Cox is 3.86 times more volatile than Aim Taxexempt Funds. It trades about 0.08 of its potential returns per unit of risk. Aim Taxexempt Funds is currently generating about 0.07 per unit of risk. If you would invest 4,062 in Dodge International Stock on December 4, 2024 and sell it today you would earn a total of 1,400 from holding Dodge International Stock or generate 34.47% 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. Aim Taxexempt Funds
Performance |
| Timeline |
| Dodge International Stock |
| Aim Taxexempt Funds |
Dodge Cox and Aim Taxexempt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Aim Taxexempt
The main advantage of trading using opposite Dodge Cox and Aim Taxexempt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Aim Taxexempt 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 Aim Taxexempt will offset losses from the drop in Aim Taxexempt's long position.| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. The Fairholme Fund |
| Aim Taxexempt vs. Fidelity Large Cap | Aim Taxexempt vs. Legg Mason Partners | Aim Taxexempt vs. Guidemark Large Cap | Aim Taxexempt vs. American Mutual 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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