Correlation Between Vanguard Value and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Vanguard Value 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 Vanguard Value and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Value Index and Dodge Cox Stock, you can compare the effects of market volatilities on Vanguard Value 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 Vanguard Value with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Value and Dodge Cox.
Diversification Opportunities for Vanguard Value and Dodge Cox
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between VANGUARD and Dodge is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Value Index 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 Vanguard Value 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 Vanguard Value Index 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 Vanguard Value i.e., Vanguard Value and Dodge Cox go up and down completely randomly.
Pair Corralation between Vanguard Value and Dodge Cox
Assuming the 90 days horizon Vanguard Value Index is expected to generate 0.91 times more return on investment than Dodge Cox. However, Vanguard Value Index is 1.1 times less risky than Dodge Cox. It trades about 0.16 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.15 per unit of risk. If you would invest 6,637 in Vanguard Value Index on September 2, 2024 and sell it today you would earn a total of 453.00 from holding Vanguard Value Index or generate 6.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Value Index vs. Dodge Cox Stock
Performance |
| Timeline |
| Vanguard Value Index |
| Dodge Cox Stock |
Vanguard Value and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Value and Dodge Cox
The main advantage of trading using opposite Vanguard Value and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Value 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.| Vanguard Value vs. Baillie Gifford Health | Vanguard Value vs. Lord Abbett Health | Vanguard Value vs. Alphacentric Lifesci Healthcare | Vanguard Value vs. Invesco Global Health |
| Dodge Cox vs. Omni Small Cap Value | Dodge Cox vs. T Rowe Price | Dodge Cox vs. Ab Centrated Growth | Dodge Cox vs. Tax Managed Mid Small |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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