Correlation Between Dodge Cox and Baird Smallmid
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Baird Smallmid 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 Smallmid 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 Baird Smallmid Cap, you can compare the effects of market volatilities on Dodge Cox and Baird Smallmid 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 Smallmid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Baird Smallmid.
Diversification Opportunities for Dodge Cox and Baird Smallmid
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dodge and Baird is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Baird Smallmid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baird Smallmid Cap 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 Baird Smallmid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baird Smallmid Cap has no effect on the direction of Dodge Cox i.e., Dodge Cox and Baird Smallmid go up and down completely randomly.
Pair Corralation between Dodge Cox and Baird Smallmid
Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the Baird Smallmid. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge Cox Stock is 2.11 times less risky than Baird Smallmid. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Baird Smallmid Cap is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,779 in Baird Smallmid Cap on September 13, 2024 and sell it today you would earn a total of 27.00 from holding Baird Smallmid Cap or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Baird Smallmid Cap
Performance |
| Timeline |
| Dodge Cox Stock |
| Baird Smallmid Cap |
Dodge Cox and Baird Smallmid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Baird Smallmid
The main advantage of trading using opposite Dodge Cox and Baird Smallmid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Baird Smallmid 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 Smallmid will offset losses from the drop in Baird Smallmid's long position.| Dodge Cox vs. Morningstar Unconstrained Allocation | Dodge Cox vs. Aqr Large Cap | Dodge Cox vs. Fisher Large Cap |
| Baird Smallmid vs. Small Cap Stock | Baird Smallmid vs. Sentinel Small Pany | Baird Smallmid vs. Huber Capital Diversified | Baird Smallmid vs. Wasatch Small Cap |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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