Correlation Between Dodge Cox and L Abbett
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and L Abbett 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 L Abbett 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 L Abbett Fundamental, you can compare the effects of market volatilities on Dodge Cox and L Abbett 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 L Abbett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and L Abbett.
Diversification Opportunities for Dodge Cox and L Abbett
No risk reduction
The 3 months correlation between Dodge and LAVVX is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and L Abbett Fundamental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on L Abbett Fundamental 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 L Abbett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of L Abbett Fundamental has no effect on the direction of Dodge Cox i.e., Dodge Cox and L Abbett go up and down completely randomly.
Pair Corralation between Dodge Cox and L Abbett
Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the L Abbett. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge Cox Stock is 1.07 times less risky than L Abbett. The mutual fund trades about -0.17 of its potential returns per unit of risk. The L Abbett Fundamental is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,594 in L Abbett Fundamental on September 13, 2024 and sell it today you would lose (13.00) from holding L Abbett Fundamental or give up 0.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. L Abbett Fundamental
Performance |
| Timeline |
| Dodge Cox Stock |
| L Abbett Fundamental |
Dodge Cox and L Abbett Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and L Abbett
The main advantage of trading using opposite Dodge Cox and L Abbett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, L Abbett 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 L Abbett will offset losses from the drop in L Abbett's long position.| Dodge Cox vs. Morningstar Unconstrained Allocation | Dodge Cox vs. Aqr Large Cap | Dodge Cox vs. Fisher Large Cap |
| L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Trust | L Abbett vs. Lord Abbett Focused | L Abbett vs. Floating Rate 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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