Correlation Between Dodge Cox and Absolute Convertible
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Absolute Convertible 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 Absolute Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Cox Stock and Absolute Convertible Arbitrage, you can compare the effects of market volatilities on Dodge Cox and Absolute Convertible 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 Absolute Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Absolute Convertible.
Diversification Opportunities for Dodge Cox and Absolute Convertible
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and Absolute is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Absolute Convertible Arbitrage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Absolute Convertible 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 Cox Stock are associated (or correlated) with Absolute Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Absolute Convertible has no effect on the direction of Dodge Cox i.e., Dodge Cox and Absolute Convertible go up and down completely randomly.
Pair Corralation between Dodge Cox and Absolute Convertible
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 10.83 times more return on investment than Absolute Convertible. However, Dodge Cox is 10.83 times more volatile than Absolute Convertible Arbitrage. It trades about 0.4 of its potential returns per unit of risk. Absolute Convertible Arbitrage is currently generating about 0.61 per unit of risk. If you would invest 25,973 in Dodge Cox Stock on November 5, 2024 and sell it today you would earn a total of 1,331 from holding Dodge Cox Stock or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Absolute Convertible Arbitrage
Performance |
| Timeline |
| Dodge Cox Stock |
| Absolute Convertible |
Dodge Cox and Absolute Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Absolute Convertible
The main advantage of trading using opposite Dodge Cox and Absolute Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Absolute Convertible 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 Absolute Convertible will offset losses from the drop in Absolute Convertible's long position.| Dodge Cox vs. Scharf Global Opportunity | Dodge Cox vs. Us Global Investors | Dodge Cox vs. T Rowe Price | Dodge Cox vs. Kinetics Global Fund |
| Absolute Convertible vs. Small Pany Growth | Absolute Convertible vs. Sp Smallcap 600 | Absolute Convertible vs. Legg Mason Partners | Absolute Convertible vs. Lebenthal Lisanti Small |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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