Correlation Between Causeway Global and Dodge Global
Can any of the company-specific risk be diversified away by investing in both Causeway Global and Dodge 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 Causeway Global and Dodge Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Causeway Global Value and Dodge Global Stock, you can compare the effects of market volatilities on Causeway Global and Dodge 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 Causeway Global with a short position of Dodge Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Causeway Global and Dodge Global.
Diversification Opportunities for Causeway Global and Dodge Global
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Causeway and Dodge is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Causeway Global Value and Dodge Global Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Global Stock and Causeway Global 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 Global Value are associated (or correlated) with Dodge Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Global Stock has no effect on the direction of Causeway Global i.e., Causeway Global and Dodge Global go up and down completely randomly.
Pair Corralation between Causeway Global and Dodge Global
Assuming the 90 days horizon Causeway Global Value is expected to generate 1.15 times more return on investment than Dodge Global. However, Causeway Global is 1.15 times more volatile than Dodge Global Stock. It trades about 0.06 of its potential returns per unit of risk. Dodge Global Stock is currently generating about -0.11 per unit of risk. If you would invest 1,557 in Causeway Global Value on September 12, 2024 and sell it today you would earn a total of 22.00 from holding Causeway Global Value or generate 1.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.62% |
| Values | Daily Returns |
Causeway Global Value vs. Dodge Global Stock
Performance |
| Timeline |
| Causeway Global Value |
| Dodge Global Stock |
Causeway Global and Dodge Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Causeway Global and Dodge Global
The main advantage of trading using opposite Causeway Global and Dodge Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Causeway Global position performs unexpectedly, Dodge 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 Dodge Global will offset losses from the drop in Dodge Global's long position.| Causeway Global vs. Franklin High Yield | Causeway Global vs. Transamerica Intermediate Muni | Causeway Global vs. Dws Government Money | Causeway Global vs. Gamco Global Telecommunications |
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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 the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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