Correlation Between Dodge Cox and At Equity

Can any of the company-specific risk be diversified away by investing in both Dodge Cox and At Equity 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 At Equity 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 At Equity Income, you can compare the effects of market volatilities on Dodge Cox and At Equity 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 At Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and At Equity.

Diversification Opportunities for Dodge Cox and At Equity

0.91

Correlation Coefficient

Dodge Cox  At Equity

Almost no diversification

The 3 months correlation between Dodge and AWYIX is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and At Equity Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on At Equity Income 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 At Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of At Equity Income has no effect on the direction of Dodge Cox i.e., Dodge Cox and At Equity go up and down completely randomly.

Pair Corralation between Dodge Cox and At Equity

Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the At Equity. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge Cox Stock is 1.37 times less risky than At Equity. The mutual fund trades about -0.17 of its potential returns per unit of risk. The At Equity Income is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  6,498  in At Equity Income on September 14, 2024 and sell it today you would lose (38.00) from holding At Equity Income or give up 0.58% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Dodge Cox Stock  vs.  At Equity Income

Dodge Cox Stock

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Cox Stock are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dodge Cox is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

At Equity Income

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in At Equity Income are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, At Equity is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dodge Cox and At Equity

The main advantage of trading using opposite Dodge Cox and At Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, At Equity 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 At Equity will offset losses from the drop in At Equity's long position.

The idea behind Dodge Cox Stock and At Equity Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.