Correlation Between Dodge Cox and California Tax-free
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and California Tax-free 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 California Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Global Stock and California Tax Free Income, you can compare the effects of market volatilities on Dodge Cox and California Tax-free 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 California Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and California Tax-free.
Diversification Opportunities for Dodge Cox and California Tax-free
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and California is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Global Stock and California Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Tax Free 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 Global Stock are associated (or correlated) with California Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Tax Free has no effect on the direction of Dodge Cox i.e., Dodge Cox and California Tax-free go up and down completely randomly.
Pair Corralation between Dodge Cox and California Tax-free
Assuming the 90 days horizon Dodge Global Stock is expected to generate 3.54 times more return on investment than California Tax-free. However, Dodge Cox is 3.54 times more volatile than California Tax Free Income. It trades about 0.12 of its potential returns per unit of risk. California Tax Free Income is currently generating about 0.1 per unit of risk. If you would invest 1,448 in Dodge Global Stock on November 28, 2024 and sell it today you would earn a total of 22.00 from holding Dodge Global Stock or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Global Stock vs. California Tax Free Income
Performance |
| Timeline |
| Dodge Global Stock |
| California Tax Free |
Dodge Cox and California Tax-free Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and California Tax-free
The main advantage of trading using opposite Dodge Cox and California Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, California Tax-free 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 California Tax-free will offset losses from the drop in California Tax-free's long position.| Dodge Cox vs. Small Pany Growth | Dodge Cox vs. Federated Government Income | Dodge Cox vs. Gmo Quality Fund | Dodge Cox vs. Versatile Bond Portfolio |
| California Tax-free vs. Legg Mason Western | California Tax-free vs. Goldman Sachs Emerging | California Tax-free vs. Pnc Emerging Markets | California Tax-free vs. Angel Oak Ultrashort |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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