Correlation Between Dodge Cox and International Equity
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and International Equity 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 International Equity 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 International Equity Institutional, you can compare the effects of market volatilities on Dodge Cox and International Equity 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 International Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and International Equity.
Diversification Opportunities for Dodge Cox and International Equity
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and International is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Global Stock and International Equity Instituti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International 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 Global Stock are associated (or correlated) with International Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Equity has no effect on the direction of Dodge Cox i.e., Dodge Cox and International Equity go up and down completely randomly.
Pair Corralation between Dodge Cox and International Equity
Assuming the 90 days horizon Dodge Global Stock is expected to generate 0.86 times more return on investment than International Equity. However, Dodge Global Stock is 1.16 times less risky than International Equity. It trades about 0.06 of its potential returns per unit of risk. International Equity Institutional is currently generating about -0.01 per unit of risk. If you would invest 1,639 in Dodge Global Stock on September 1, 2024 and sell it today you would earn a total of 13.00 from holding Dodge Global Stock or generate 0.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Global Stock vs. International Equity Instituti
Performance |
| Timeline |
| Dodge Global Stock |
| International Equity |
Dodge Cox and International Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and International Equity
The main advantage of trading using opposite Dodge Cox and International Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, International Equity 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 International Equity will offset losses from the drop in International Equity'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 |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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