Correlation Between Dodge International and Brandes E
Can any of the company-specific risk be diversified away by investing in both Dodge International and Brandes E 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 International and Brandes E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge International Stock and Brandes E Plus, you can compare the effects of market volatilities on Dodge International and Brandes E 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 International with a short position of Brandes E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge International and Brandes E.
Diversification Opportunities for Dodge International and Brandes E
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dodge and Brandes is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Brandes E Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes E Plus and Dodge International 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 International Stock are associated (or correlated) with Brandes E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes E Plus has no effect on the direction of Dodge International i.e., Dodge International and Brandes E go up and down completely randomly.
Pair Corralation between Dodge International and Brandes E
Assuming the 90 days horizon Dodge International Stock is expected to generate 2.36 times more return on investment than Brandes E. However, Dodge International is 2.36 times more volatile than Brandes E Plus. It trades about 0.09 of its potential returns per unit of risk. Brandes E Plus is currently generating about 0.2 per unit of risk. If you would invest 5,274 in Dodge International Stock on September 13, 2024 and sell it today you would earn a total of 47.00 from holding Dodge International Stock or generate 0.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge International Stock vs. Brandes E Plus
Performance |
| Timeline |
| Dodge International Stock |
| Brandes E Plus |
Dodge International and Brandes E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge International and Brandes E
The main advantage of trading using opposite Dodge International and Brandes E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge International position performs unexpectedly, Brandes E 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 Brandes E will offset losses from the drop in Brandes E's long position.| Dodge International vs. Dodge Stock Fund | Dodge International vs. Dodge Income Fund | Dodge International vs. Dodge Balanced Fund | Dodge International vs. The Fairholme Fund |
| Brandes E vs. Brandes Small Cap | Brandes E vs. Brandes Small Cap | Brandes E vs. Brandes Small Cap | Brandes E vs. Brandes E Plus |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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