Correlation Between Oakmark International and Dodge Cox

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

Diversification Opportunities for Oakmark International and Dodge Cox

0.96
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Oakmark and Dodge is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark International 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 Oakmark 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 Oakmark International 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 Oakmark International i.e., Oakmark International and Dodge Cox go up and down completely randomly.

Pair Corralation between Oakmark International and Dodge Cox

Assuming the 90 days horizon Oakmark International is expected to under-perform the Dodge Cox. In addition to that, Oakmark International is 1.26 times more volatile than Dodge Cox International. It trades about -0.26 of its total potential returns per unit of risk. Dodge Cox International is currently generating about -0.25 per unit of volatility. If you would invest  4,108  in Dodge Cox International on July 5, 2022 and sell it today you would lose (308.00)  from holding Dodge Cox International or give up 7.5% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Oakmark International  vs.  Dodge Cox International

 Performance (%) 
       Timeline  
Oakmark International 
Oakmark Performance
0 of 100
Over the last 90 days Oakmark International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Oakmark Price Channel

Dodge Cox International 
Dodge Performance
0 of 100
Over the last 90 days Dodge Cox International has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Dodge Price Channel

Oakmark International and Dodge Cox Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Oakmark International and Dodge Cox

The main advantage of trading using opposite Oakmark International and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oakmark 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 Oakmark International 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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