Correlation Between Dodge Cox and Transamerica Intl
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Transamerica Intl 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 Transamerica Intl 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 Transamerica Intl Equity, you can compare the effects of market volatilities on Dodge Cox and Transamerica Intl 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 Transamerica Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Transamerica Intl.
Diversification Opportunities for Dodge Cox and Transamerica Intl
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Transamerica is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Transamerica Intl Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica Intl 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 Transamerica Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica Intl Equity has no effect on the direction of Dodge Cox i.e., Dodge Cox and Transamerica Intl go up and down completely randomly.
Pair Corralation between Dodge Cox and Transamerica Intl
Assuming the 90 days horizon Dodge International Stock is expected to under-perform the Transamerica Intl. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge International Stock is 1.13 times less risky than Transamerica Intl. The mutual fund trades about -0.25 of its potential returns per unit of risk. The Transamerica Intl Equity is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 2,200 in Transamerica Intl Equity on August 29, 2024 and sell it today you would lose (76.00) from holding Transamerica Intl Equity or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge International Stock vs. Transamerica Intl Equity
Performance |
| Timeline |
| Dodge International Stock |
| Transamerica Intl Equity |
Dodge Cox and Transamerica Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Transamerica Intl
The main advantage of trading using opposite Dodge Cox and Transamerica Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Transamerica Intl 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 Transamerica Intl will offset losses from the drop in Transamerica Intl'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 |
| Transamerica Intl vs. Transamerica Funds | Transamerica Intl vs. Barings Active Short | Transamerica Intl vs. Nuveen Massachusetts Municipal | Transamerica Intl vs. Ambrus Core Bond |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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