Correlation Between Dodge Cox and Baird Core
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Baird Core 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 Baird Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Income Fund and Baird E Plus, you can compare the effects of market volatilities on Dodge Cox and Baird Core 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 Baird Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Baird Core.
Diversification Opportunities for Dodge Cox and Baird Core
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dodge and Baird is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Income Fund and Baird E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird E Plus 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 Income Fund are associated (or correlated) with Baird Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird E Plus has no effect on the direction of Dodge Cox i.e., Dodge Cox and Baird Core go up and down completely randomly.
Pair Corralation between Dodge Cox and Baird Core
Assuming the 90 days horizon Dodge Income Fund is expected to generate about the same return on investment as Baird E Plus. However, Dodge Cox is 1.15 times more volatile than Baird E Plus. It trades about -0.05 of its potential returns per unit of risk. Baird E Plus is currently producing about -0.06 per unit of risk. If you would invest 1,015 in Baird E Plus on August 26, 2024 and sell it today you would lose (4.00) from holding Baird E Plus or give up 0.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Income Fund vs. Baird E Plus
Performance |
| Timeline |
| Dodge Income |
| Baird E Plus |
Dodge Cox and Baird Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Baird Core
The main advantage of trading using opposite Dodge Cox and Baird Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Baird Core 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 Baird Core will offset losses from the drop in Baird Core's long position.| Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Harbor Bond Fund |
| Baird Core vs. Metropolitan West Total | Baird Core vs. Western Asset E | Baird Core vs. John Hancock Disciplined | Baird Core vs. American Beacon Bridgeway |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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