Correlation Between Dodge Cox and Tax Exempt
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Tax Exempt 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 Tax Exempt 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 Tax Exempt Bond, you can compare the effects of market volatilities on Dodge Cox and Tax Exempt 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 Tax Exempt. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Tax Exempt.
Diversification Opportunities for Dodge Cox and Tax Exempt
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Dodge and Tax is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Emerging and Tax Exempt Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tax Exempt Bond 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 Tax Exempt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tax Exempt Bond has no effect on the direction of Dodge Cox i.e., Dodge Cox and Tax Exempt go up and down completely randomly.
Pair Corralation between Dodge Cox and Tax Exempt
Assuming the 90 days horizon Dodge Cox Emerging is expected to generate 3.88 times more return on investment than Tax Exempt. However, Dodge Cox is 3.88 times more volatile than Tax Exempt Bond. It trades about 0.07 of its potential returns per unit of risk. Tax Exempt Bond is currently generating about 0.15 per unit of risk. If you would invest 770.00 in Dodge Cox Emerging on September 4, 2024 and sell it today you would earn a total of 130.00 from holding Dodge Cox Emerging or generate 16.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Emerging vs. Tax Exempt Bond
Performance |
| Timeline |
| Dodge Cox Emerging |
| Tax Exempt Bond |
Dodge Cox and Tax Exempt Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Tax Exempt
The main advantage of trading using opposite Dodge Cox and Tax Exempt positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Tax Exempt 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 Tax Exempt will offset losses from the drop in Tax Exempt'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 |
| Tax Exempt vs. Tortoise Energy Independence | Tax Exempt vs. World Energy Fund | Tax Exempt vs. Salient Mlp Energy | Tax Exempt vs. Icon Natural Resources |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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