Correlation Between Dodge Cox and Vanguard Pacific
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Vanguard Pacific 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 Pacific 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 Pacific Stock, you can compare the effects of market volatilities on Dodge Cox and Vanguard Pacific 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 Pacific. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Vanguard Pacific.
Diversification Opportunities for Dodge Cox and Vanguard Pacific
-0.54 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dodge and Vanguard is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Vanguard Pacific Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Pacific Stock 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 Pacific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Pacific Stock has no effect on the direction of Dodge Cox i.e., Dodge Cox and Vanguard Pacific go up and down completely randomly.
Pair Corralation between Dodge Cox and Vanguard Pacific
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 0.68 times more return on investment than Vanguard Pacific. However, Dodge Cox Stock is 1.46 times less risky than Vanguard Pacific. It trades about 0.11 of its potential returns per unit of risk. Vanguard Pacific Stock is currently generating about 0.04 per unit of risk. If you would invest 23,502 in Dodge Cox Stock on September 14, 2024 and sell it today you would earn a total of 4,550 from holding Dodge Cox Stock or generate 19.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Vanguard Pacific Stock
Performance |
| Timeline |
| Dodge Cox Stock |
| Vanguard Pacific Stock |
Dodge Cox and Vanguard Pacific Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Vanguard Pacific
The main advantage of trading using opposite Dodge Cox and Vanguard Pacific positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Vanguard Pacific 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 Pacific will offset losses from the drop in Vanguard Pacific's long position.| Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Total Return Fund |
| Vanguard Pacific vs. Jhancock Global Equity | Vanguard Pacific vs. Ab Global Bond | Vanguard Pacific vs. Investec Global Franchise | Vanguard Pacific vs. Artisan Global Unconstrained |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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