Correlation Between CAUSEWAY INTERNATIONAL and DODGE COX

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Can any of the company-specific risk be diversified away by investing in both CAUSEWAY INTERNATIONAL 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 CAUSEWAY INTERNATIONAL and DODGE COX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CAUSEWAY INTERNATIONAL SMALL and DODGE COX INTERNATIONAL, you can compare the effects of market volatilities on CAUSEWAY INTERNATIONAL 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 CAUSEWAY INTERNATIONAL with a short position of DODGE COX. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAUSEWAY INTERNATIONAL and DODGE COX.

Diversification Opportunities for CAUSEWAY INTERNATIONAL and DODGE COX

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between CAUSEWAY and DODGE is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding CAUSEWAY INTERNATIONAL SMALL and DODGE COX INTERNATIONAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DODGE COX INTERNATIONAL and CAUSEWAY INTERNATIONAL 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 CAUSEWAY INTERNATIONAL SMALL 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 INTERNATIONAL has no effect on the direction of CAUSEWAY INTERNATIONAL i.e., CAUSEWAY INTERNATIONAL and DODGE COX go up and down completely randomly.

Pair Corralation between CAUSEWAY INTERNATIONAL and DODGE COX

Assuming the 90 days horizon CAUSEWAY INTERNATIONAL SMALL is expected to under-perform the DODGE COX. But the mutual fund apears to be less risky and, when comparing its historical volatility, CAUSEWAY INTERNATIONAL SMALL is 1.12 times less risky than DODGE COX. The mutual fund trades about -0.04 of its potential returns per unit of risk. The DODGE COX INTERNATIONAL is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest  4,685  in DODGE COX INTERNATIONAL on September 5, 2022 and sell it today you would lose (199.00)  from holding DODGE COX INTERNATIONAL or give up 4.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

CAUSEWAY INTERNATIONAL SMALL  vs.  DODGE COX INTERNATIONAL

 Performance (%) 
       Timeline  
CAUSEWAY INTERNATIONAL 
CAUSEWAY Performance
5 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in CAUSEWAY INTERNATIONAL SMALL are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, CAUSEWAY INTERNATIONAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

CAUSEWAY Price Channel

DODGE COX INTERNATIONAL 
DODGE Performance
7 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in DODGE COX INTERNATIONAL are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, DODGE COX may actually be approaching a critical reversion point that can send shares even higher in January 2023.

DODGE Price Channel

CAUSEWAY INTERNATIONAL and DODGE COX Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CAUSEWAY INTERNATIONAL and DODGE COX

The main advantage of trading using opposite CAUSEWAY INTERNATIONAL and DODGE COX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CAUSEWAY INTERNATIONAL 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.
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The idea behind CAUSEWAY INTERNATIONAL SMALL and DODGE COX INTERNATIONAL 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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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 Transaction History module to view history of all your transactions and understand their impact on performance.

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