Correlation Between Dodge Cox and Ariel Global

Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Ariel Global 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 Ariel Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dodge Cox Global and Ariel Global Fund, you can compare the effects of market volatilities on Dodge Cox and Ariel Global 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 Ariel Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Ariel Global.

Diversification Opportunities for Dodge Cox and Ariel Global

0.99

Correlation Coefficient

Dodge Cox  Ariel Global

No risk reduction

The 3 months correlation between Dodge and Ariel is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Global and Ariel Global Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ariel Global 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 Global are associated (or correlated) with Ariel Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ariel Global has no effect on the direction of Dodge Cox i.e., Dodge Cox and Ariel Global go up and down completely randomly.

Pair Corralation between Dodge Cox and Ariel Global

Assuming the 90 days horizon Dodge Cox is expected to generate 1.04 times less return on investment than Ariel Global. But when comparing it to its historical volatility, Dodge Cox Global is 1.02 times less risky than Ariel Global. It trades about 0.14 of its potential returns per unit of risk. Ariel Global Fund is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,237  in Ariel Global Fund on December 28, 2024 and sell it today you would earn a total of  85.00  from holding Ariel Global Fund or generate 6.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Dodge Cox Global  vs.  Ariel Global Fund

Dodge Cox Global

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Cox Global are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dodge Cox may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Ariel Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ariel Global Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Ariel Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dodge Cox and Ariel Global

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

The idea behind Dodge Cox Global and Ariel Global Fund 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .