Correlation Between Dodge Cox and Baillie Gifford
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Baillie Gifford 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 Baillie Gifford 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 Baillie Gifford Emerging, you can compare the effects of market volatilities on Dodge Cox and Baillie Gifford 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 Baillie Gifford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Baillie Gifford.
Diversification Opportunities for Dodge Cox and Baillie Gifford
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dodge and Baillie is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Baillie Gifford Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baillie Gifford Emerging 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 Baillie Gifford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baillie Gifford Emerging has no effect on the direction of Dodge Cox i.e., Dodge Cox and Baillie Gifford go up and down completely randomly.
Pair Corralation between Dodge Cox and Baillie Gifford
Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the Baillie Gifford. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge Cox Stock is 1.4 times less risky than Baillie Gifford. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Baillie Gifford Emerging is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 1,987 in Baillie Gifford Emerging on December 31, 2024 and sell it today you would earn a total of 64.00 from holding Baillie Gifford Emerging or generate 3.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Baillie Gifford Emerging
Performance |
| Timeline |
| Dodge Cox Stock |
| Baillie Gifford Emerging |
Dodge Cox and Baillie Gifford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Baillie Gifford
The main advantage of trading using opposite Dodge Cox and Baillie Gifford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Baillie Gifford 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 Baillie Gifford will offset losses from the drop in Baillie Gifford's long position.| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Global Stock |
| Baillie Gifford vs. The International Smaller | Baillie Gifford vs. The International Smaller | Baillie Gifford vs. The International Equity | Baillie Gifford vs. The Eafe Pure |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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