Correlation Between Dodge Cox and Vanguard Small
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Vanguard Small 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 Vanguard Small 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 Vanguard Small Cap Value, you can compare the effects of market volatilities on Dodge Cox and Vanguard Small 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 Vanguard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Vanguard Small.
Diversification Opportunities for Dodge Cox and Vanguard Small
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dodge and Vanguard is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Vanguard Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small 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 Vanguard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Dodge Cox i.e., Dodge Cox and Vanguard Small go up and down completely randomly.
Pair Corralation between Dodge Cox and Vanguard Small
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 0.85 times more return on investment than Vanguard Small. However, Dodge Cox Stock is 1.17 times less risky than Vanguard Small. It trades about 0.31 of its potential returns per unit of risk. Vanguard Small Cap Value is currently generating about 0.18 per unit of risk. If you would invest 26,104 in Dodge Cox Stock on October 26, 2024 and sell it today you would earn a total of 1,119 from holding Dodge Cox Stock or generate 4.29% 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. Vanguard Small Cap Value
Performance |
| Timeline |
| Dodge Cox Stock |
| Vanguard Small Cap |
Dodge Cox and Vanguard Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Vanguard Small
The main advantage of trading using opposite Dodge Cox and Vanguard Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Vanguard Small 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 Vanguard Small will offset losses from the drop in Vanguard Small's long position.| Dodge Cox vs. William Blair Small | Dodge Cox vs. Ultramid Cap Profund Ultramid Cap | Dodge Cox vs. Lsv Small Cap | Dodge Cox vs. Great West Loomis Sayles |
| Vanguard Small vs. Vest Large Cap | Vanguard Small vs. Blackrock Large Cap | Vanguard Small vs. Ab Large Cap | Vanguard Small vs. Dodge Cox Stock |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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