Correlation Between Dodge Cox and Gmo Global
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Gmo Global 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 Gmo Global 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 Gmo Global Equity, you can compare the effects of market volatilities on Dodge Cox and Gmo Global 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 Gmo Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Gmo Global.
Diversification Opportunities for Dodge Cox and Gmo Global
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and Gmo is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Gmo Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gmo Global Equity 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 Gmo Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gmo Global Equity has no effect on the direction of Dodge Cox i.e., Dodge Cox and Gmo Global go up and down completely randomly.
Pair Corralation between Dodge Cox and Gmo Global
Assuming the 90 days horizon Dodge International Stock is expected to under-perform the Gmo Global. In addition to that, Dodge Cox is 1.17 times more volatile than Gmo Global Equity. It trades about -0.2 of its total potential returns per unit of risk. Gmo Global Equity is currently generating about 0.01 per unit of volatility. If you would invest 2,995 in Gmo Global Equity on August 26, 2024 and sell it today you would earn a total of 1.00 from holding Gmo Global Equity or generate 0.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge International Stock vs. Gmo Global Equity
Performance |
| Timeline |
| Dodge International Stock |
| Gmo Global Equity |
Dodge Cox and Gmo Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Gmo Global
The main advantage of trading using opposite Dodge Cox and Gmo Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Gmo Global 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 Gmo Global will offset losses from the drop in Gmo Global's long position.| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. The Fairholme Fund |
| Gmo Global vs. Tax Managed Large Cap | Gmo Global vs. Nuveen Winslow Large Cap | Gmo Global vs. Gmo Equity Allocation | Gmo Global vs. Federated Mdt Large |
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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