Correlation Between Dodge Cox and First Investors
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and First Investors 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 First Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Cox Emerging and First Investors Select, you can compare the effects of market volatilities on Dodge Cox and First Investors 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 First Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and First Investors.
Diversification Opportunities for Dodge Cox and First Investors
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dodge and First is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Emerging and First Investors Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Investors Select 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 Emerging are associated (or correlated) with First Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Investors Select has no effect on the direction of Dodge Cox i.e., Dodge Cox and First Investors go up and down completely randomly.
Pair Corralation between Dodge Cox and First Investors
Assuming the 90 days horizon Dodge Cox is expected to generate 4.6 times less return on investment than First Investors. But when comparing it to its historical volatility, Dodge Cox Emerging is 1.01 times less risky than First Investors. It trades about 0.03 of its potential returns per unit of risk. First Investors Select is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,110 in First Investors Select on August 29, 2024 and sell it today you would earn a total of 176.00 from holding First Investors Select or generate 15.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Emerging vs. First Investors Select
Performance |
| Timeline |
| Dodge Cox Emerging |
| First Investors Select |
Dodge Cox and First Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and First Investors
The main advantage of trading using opposite Dodge Cox and First Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, First Investors 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 First Investors will offset losses from the drop in First Investors' long position.| Dodge Cox vs. Vanguard Emerging Markets | Dodge Cox vs. Vanguard Emerging Markets | Dodge Cox vs. HUMANA INC | Dodge Cox vs. Aquagold International |
| First Investors vs. Vanguard Emerging Markets | First Investors vs. Dodge Cox Emerging | First Investors vs. Barings Emerging Markets | First Investors vs. Rbc Emerging Markets |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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