Correlation Between Lord Abbett and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Lord Abbett and Dodge Cox 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 Lord Abbett and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lord Abbett Affiliated and Dodge Cox Stock, you can compare the effects of market volatilities on Lord Abbett and Dodge Cox 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 Lord Abbett with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lord Abbett and Dodge Cox.
Diversification Opportunities for Lord Abbett and Dodge Cox
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Lord and Dodge is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Lord Abbett Affiliated and Dodge Cox Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox Stock and Lord Abbett 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 Lord Abbett Affiliated are associated (or correlated) with Dodge Cox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Cox Stock has no effect on the direction of Lord Abbett i.e., Lord Abbett and Dodge Cox go up and down completely randomly.
Pair Corralation between Lord Abbett and Dodge Cox
Assuming the 90 days horizon Lord Abbett Affiliated is expected to generate 0.67 times more return on investment than Dodge Cox. However, Lord Abbett Affiliated is 1.49 times less risky than Dodge Cox. It trades about -0.45 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about -0.32 per unit of risk. If you would invest 2,055 in Lord Abbett Affiliated on September 22, 2024 and sell it today you would lose (196.00) from holding Lord Abbett Affiliated or give up 9.54% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lord Abbett Affiliated vs. Dodge Cox Stock
Performance |
| Timeline |
| Lord Abbett Affiliated |
| Dodge Cox Stock |
Lord Abbett and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lord Abbett and Dodge Cox
The main advantage of trading using opposite Lord Abbett and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lord Abbett position performs unexpectedly, Dodge Cox 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 Dodge Cox will offset losses from the drop in Dodge Cox's long position.| Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Trust | Lord Abbett vs. Lord Abbett Focused | Lord Abbett vs. Floating Rate Fund |
| Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Total Return 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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