Correlation Between Dodge Cox and Europac International
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Europac International 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 Europac International 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 Europac International Value, you can compare the effects of market volatilities on Dodge Cox and Europac International 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 Europac International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Europac International.
Diversification Opportunities for Dodge Cox and Europac International
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dodge and Europac is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Europac International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Europac International 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 International Stock are associated (or correlated) with Europac International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Europac International has no effect on the direction of Dodge Cox i.e., Dodge Cox and Europac International go up and down completely randomly.
Pair Corralation between Dodge Cox and Europac International
Assuming the 90 days horizon Dodge International Stock is expected to generate 1.23 times more return on investment than Europac International. However, Dodge Cox is 1.23 times more volatile than Europac International Value. It trades about 0.31 of its potential returns per unit of risk. Europac International Value is currently generating about 0.18 per unit of risk. If you would invest 5,347 in Dodge International Stock on December 10, 2024 and sell it today you would earn a total of 280.00 from holding Dodge International Stock or generate 5.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge International Stock vs. Europac International Value
Performance |
| Timeline |
| Dodge International Stock |
| Europac International |
Dodge Cox and Europac International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Europac International
The main advantage of trading using opposite Dodge Cox and Europac International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Europac International 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 Europac International will offset losses from the drop in Europac International's long position.| Dodge Cox vs. Dodge Stock Fund | ||
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| Dodge Cox vs. The Fairholme Fund |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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