Correlation Between Dodge Cox and Us Government
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Us Government 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 Us Government 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 Us Government Securities, you can compare the effects of market volatilities on Dodge Cox and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Us Government.
Diversification Opportunities for Dodge Cox and Us Government
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dodge and USGFX is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Emerging and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of Dodge Cox i.e., Dodge Cox and Us Government go up and down completely randomly.
Pair Corralation between Dodge Cox and Us Government
Assuming the 90 days horizon Dodge Cox Emerging is expected to generate 1.98 times more return on investment than Us Government. However, Dodge Cox is 1.98 times more volatile than Us Government Securities. It trades about 0.05 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.02 per unit of risk. If you would invest 735.00 in Dodge Cox Emerging on August 30, 2024 and sell it today you would earn a total of 173.00 from holding Dodge Cox Emerging or generate 23.54% 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. Us Government Securities
Performance |
| Timeline |
| Dodge Cox Emerging |
| Us Government Securities |
Dodge Cox and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Us Government
The main advantage of trading using opposite Dodge Cox and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| Dodge Cox vs. Vanguard Emerging Markets | Dodge Cox vs. Vanguard Emerging Markets | Dodge Cox vs. HUMANA INC | Dodge Cox vs. Aquagold International |
| Us Government vs. Shelton Funds | Us Government vs. Artisan Thematic Fund | Us Government vs. Versatile Bond Portfolio | Us Government vs. Barings Active Short |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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