Correlation Between Dodge Cox and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Franklin Mutual 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 Franklin Mutual 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 Franklin Mutual Beacon, you can compare the effects of market volatilities on Dodge Cox and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Franklin Mutual.
Diversification Opportunities for Dodge Cox and Franklin Mutual
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dodge and Franklin is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon 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 Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Beacon has no effect on the direction of Dodge Cox i.e., Dodge Cox and Franklin Mutual go up and down completely randomly.
Pair Corralation between Dodge Cox and Franklin Mutual
Assuming the 90 days horizon Dodge International Stock is expected to under-perform the Franklin Mutual. In addition to that, Dodge Cox is 1.37 times more volatile than Franklin Mutual Beacon. It trades about -0.01 of its total potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.07 per unit of volatility. If you would invest 1,702 in Franklin Mutual Beacon on August 31, 2024 and sell it today you would earn a total of 42.00 from holding Franklin Mutual Beacon or generate 2.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge International Stock vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Dodge International Stock |
| Franklin Mutual Beacon |
Dodge Cox and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Franklin Mutual
The main advantage of trading using opposite Dodge Cox and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual'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 |
| Franklin Mutual vs. T Rowe Price | Franklin Mutual vs. Qs Large Cap | Franklin Mutual vs. Americafirst Large Cap | Franklin Mutual vs. Fidelity Series 1000 |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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