Correlation Between Dodge Cox and Hennessy
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Hennessy 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 Hennessy 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 Hennessy Bp Midstream, you can compare the effects of market volatilities on Dodge Cox and Hennessy 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 Hennessy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Hennessy.
Diversification Opportunities for Dodge Cox and Hennessy
Good diversification
The 3 months correlation between Dodge and Hennessy is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Emerging and Hennessy Bp Midstream in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hennessy Bp Midstream 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 Hennessy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hennessy Bp Midstream has no effect on the direction of Dodge Cox i.e., Dodge Cox and Hennessy go up and down completely randomly.
Pair Corralation between Dodge Cox and Hennessy
Assuming the 90 days horizon Dodge Cox Emerging is expected to under-perform the Hennessy. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge Cox Emerging is 2.49 times less risky than Hennessy. The mutual fund trades about -0.17 of its potential returns per unit of risk. The Hennessy Bp Midstream is currently generating about 0.42 of returns per unit of risk over similar time horizon. If you would invest 1,248 in Hennessy Bp Midstream on September 5, 2024 and sell it today you would earn a total of 195.00 from holding Hennessy Bp Midstream or generate 15.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Emerging vs. Hennessy Bp Midstream
Performance |
| Timeline |
| Dodge Cox Emerging |
| Hennessy Bp Midstream |
Dodge Cox and Hennessy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Hennessy
The main advantage of trading using opposite Dodge Cox and Hennessy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Hennessy 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 Hennessy will offset losses from the drop in Hennessy's long position.| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Global Stock |
| Hennessy vs. Hennessy Nerstone Growth | Hennessy vs. Hennessy Nerstone Value | Hennessy vs. Hennessy Nerstone Mid | Hennessy vs. Hennessy Large Cap |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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