Correlation Between American Beacon and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both American Beacon 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 American Beacon and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Twentyfour and Dodge Cox Emerging, you can compare the effects of market volatilities on American Beacon 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 American Beacon with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Dodge Cox.
Diversification Opportunities for American Beacon and Dodge Cox
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Dodge is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Twentyfour and Dodge Cox Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox Emerging and American Beacon 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 American Beacon Twentyfour 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 Emerging has no effect on the direction of American Beacon i.e., American Beacon and Dodge Cox go up and down completely randomly.
Pair Corralation between American Beacon and Dodge Cox
Assuming the 90 days horizon American Beacon is expected to generate 2.3 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, American Beacon Twentyfour is 5.23 times less risky than Dodge Cox. It trades about 0.12 of its potential returns per unit of risk. Dodge Cox Emerging is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 735.00 in Dodge Cox Emerging on September 4, 2024 and sell it today you would earn a total of 165.00 from holding Dodge Cox Emerging or generate 22.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Twentyfour vs. Dodge Cox Emerging
Performance |
| Timeline |
| American Beacon Twen |
| Dodge Cox Emerging |
American Beacon and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Dodge Cox
The main advantage of trading using opposite American Beacon and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon 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.| American Beacon vs. Western Asset High | American Beacon vs. Ab Global Risk | American Beacon vs. Ab High Income | American Beacon vs. Pace High Yield |
| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Global 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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