Correlation Between Dodge International and Templeton Foreign
Can any of the company-specific risk be diversified away by investing in both Dodge International and Templeton 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 Templeton 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 Templeton Foreign Fund, you can compare the effects of market volatilities on Dodge International and Templeton 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 Templeton Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge International and Templeton Foreign.
Diversification Opportunities for Dodge International and Templeton Foreign
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dodge and Templeton is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign 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 Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Dodge International i.e., Dodge International and Templeton Foreign go up and down completely randomly.
Pair Corralation between Dodge International and Templeton Foreign
Assuming the 90 days horizon Dodge International Stock is expected to under-perform the Templeton Foreign. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge International Stock is 1.21 times less risky than Templeton Foreign. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Templeton Foreign Fund is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest 824.00 in Templeton Foreign Fund on September 12, 2024 and sell it today you would lose (5.00) from holding Templeton Foreign Fund or give up 0.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge International Stock vs. Templeton Foreign Fund
Performance |
| Timeline |
| Dodge International Stock |
| Templeton Foreign |
Dodge International and Templeton Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge International and Templeton Foreign
The main advantage of trading using opposite Dodge International and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge International position performs unexpectedly, Templeton 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 Templeton Foreign will offset losses from the drop in Templeton 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 |
| Templeton Foreign vs. Oakmark International Fund | Templeton Foreign vs. Dodge International Stock | Templeton Foreign vs. Oakmark International Fund | Templeton Foreign vs. Oakmark International 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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