Correlation Between Dodge Cox and Selected American
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Selected American 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 Selected American 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 Selected American Shares, you can compare the effects of market volatilities on Dodge Cox and Selected American 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 Selected American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Selected American.
Diversification Opportunities for Dodge Cox and Selected American
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dodge and Selected is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Selected American Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selected American Shares 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 Selected American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selected American Shares has no effect on the direction of Dodge Cox i.e., Dodge Cox and Selected American go up and down completely randomly.
Pair Corralation between Dodge Cox and Selected American
Assuming the 90 days horizon Dodge International Stock is expected to under-perform the Selected American. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge International Stock is 1.39 times less risky than Selected American. The mutual fund trades about -0.07 of its potential returns per unit of risk. The Selected American Shares is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 4,211 in Selected American Shares on September 1, 2024 and sell it today you would earn a total of 251.00 from holding Selected American Shares or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dodge International Stock vs. Selected American Shares
Performance |
| Timeline |
| Dodge International Stock |
| Selected American Shares |
Dodge Cox and Selected American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Selected American
The main advantage of trading using opposite Dodge Cox and Selected American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Selected American 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 Selected American will offset losses from the drop in Selected American'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 |
| Selected American vs. Marsico Focus Fund | Selected American vs. Artisan International Fund | Selected American vs. Third Avenue Value | Selected American vs. Oakmark Select 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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