Correlation Between Dodge Cox and Sound Shore
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Sound Shore 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 Sound Shore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Stock Fund and Sound Shore Fund, you can compare the effects of market volatilities on Dodge Cox and Sound Shore 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 Sound Shore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Sound Shore.
Diversification Opportunities for Dodge Cox and Sound Shore
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Sound is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Stock Fund and Sound Shore Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sound Shore Fund 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 Stock Fund are associated (or correlated) with Sound Shore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sound Shore Fund has no effect on the direction of Dodge Cox i.e., Dodge Cox and Sound Shore go up and down completely randomly.
Pair Corralation between Dodge Cox and Sound Shore
Assuming the 90 days horizon Dodge Stock Fund is expected to generate 0.68 times more return on investment than Sound Shore. However, Dodge Stock Fund is 1.48 times less risky than Sound Shore. It trades about 0.05 of its potential returns per unit of risk. Sound Shore Fund is currently generating about 0.01 per unit of risk. If you would invest 22,404 in Dodge Stock Fund on October 25, 2024 and sell it today you would earn a total of 4,552 from holding Dodge Stock Fund or generate 20.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Stock Fund vs. Sound Shore Fund
Performance |
| Timeline |
| Dodge Stock Fund |
| Sound Shore Fund |
Dodge Cox and Sound Shore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Sound Shore
The main advantage of trading using opposite Dodge Cox and Sound Shore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Sound Shore 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 Sound Shore will offset losses from the drop in Sound Shore's long position.| Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Total Return Fund |
| Sound Shore vs. Tiaa Cref Lifestyle Servative | Sound Shore vs. Global Diversified Income | Sound Shore vs. Vy T Rowe | Sound Shore vs. Tax Free Conservative Income |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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