Correlation Between Dodge Cox and Franklin Electric
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Franklin Electric 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 Electric 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 Franklin Electric Co, you can compare the effects of market volatilities on Dodge Cox and Franklin Electric 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 Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Franklin Electric.
Diversification Opportunities for Dodge Cox and Franklin Electric
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dodge and Franklin is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Global Stock and Franklin Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Electric 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 Franklin Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Electric has no effect on the direction of Dodge Cox i.e., Dodge Cox and Franklin Electric go up and down completely randomly.
Pair Corralation between Dodge Cox and Franklin Electric
Assuming the 90 days horizon Dodge Cox is expected to generate 15.89 times less return on investment than Franklin Electric. But when comparing it to its historical volatility, Dodge Global Stock is 3.84 times less risky than Franklin Electric. It trades about 0.06 of its potential returns per unit of risk. Franklin Electric Co is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 9,549 in Franklin Electric Co on September 1, 2024 and sell it today you would earn a total of 1,281 from holding Franklin Electric Co or generate 13.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Global Stock vs. Franklin Electric Co
Performance |
| Timeline |
| Dodge Global Stock |
| Franklin Electric |
Dodge Cox and Franklin Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Franklin Electric
The main advantage of trading using opposite Dodge Cox and Franklin Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Franklin Electric 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 Electric will offset losses from the drop in Franklin Electric's long position.| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Cox Emerging | Dodge Cox vs. Dodge Balanced Fund |
| Franklin Electric vs. Flowserve | Franklin Electric vs. Dover | Franklin Electric vs. Crane Company | Franklin Electric vs. Graco Inc |
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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