Correlation Between Dodge International and Pimco Foreign
Can any of the company-specific risk be diversified away by investing in both Dodge International and Pimco Foreign 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 Pimco Foreign 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 Pimco Foreign Bond, you can compare the effects of market volatilities on Dodge International and Pimco Foreign 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 Pimco Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge International and Pimco Foreign.
Diversification Opportunities for Dodge International and Pimco Foreign
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dodge and Pimco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Pimco Foreign Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Foreign Bond 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 Pimco Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Foreign Bond has no effect on the direction of Dodge International i.e., Dodge International and Pimco Foreign go up and down completely randomly.
Pair Corralation between Dodge International and Pimco Foreign
Assuming the 90 days horizon Dodge International Stock is expected to generate 1.9 times more return on investment than Pimco Foreign. However, Dodge International is 1.9 times more volatile than Pimco Foreign Bond. It trades about 0.06 of its potential returns per unit of risk. Pimco Foreign Bond is currently generating about 0.03 per unit of risk. If you would invest 4,233 in Dodge International Stock on September 14, 2024 and sell it today you would earn a total of 1,072 from holding Dodge International Stock or generate 25.32% 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. Pimco Foreign Bond
Performance |
| Timeline |
| Dodge International Stock |
| Pimco Foreign Bond |
Dodge International and Pimco Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge International and Pimco Foreign
The main advantage of trading using opposite Dodge International and Pimco Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge International position performs unexpectedly, Pimco Foreign 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 Pimco Foreign will offset losses from the drop in Pimco Foreign'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 |
| Pimco Foreign vs. Gamco Global Telecommunications | Pimco Foreign vs. Dws Government Money | Pimco Foreign vs. T Rowe Price | Pimco Foreign vs. Counterpoint Tactical Municipal |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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