Correlation Between Dodge Cox and Salient Alternative
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Salient Alternative 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 Salient Alternative 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 Salient Alternative Beta, you can compare the effects of market volatilities on Dodge Cox and Salient Alternative 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 Salient Alternative. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Salient Alternative.
Diversification Opportunities for Dodge Cox and Salient Alternative
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dodge and Salient is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Global Stock and Salient Alternative Beta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Salient Alternative Beta 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 Salient Alternative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Salient Alternative Beta has no effect on the direction of Dodge Cox i.e., Dodge Cox and Salient Alternative go up and down completely randomly.
Pair Corralation between Dodge Cox and Salient Alternative
Assuming the 90 days horizon Dodge Global Stock is expected to generate 1.09 times more return on investment than Salient Alternative. However, Dodge Cox is 1.09 times more volatile than Salient Alternative Beta. It trades about 0.09 of its potential returns per unit of risk. Salient Alternative Beta is currently generating about 0.1 per unit of risk. If you would invest 1,408 in Dodge Global Stock on August 25, 2024 and sell it today you would earn a total of 230.00 from holding Dodge Global Stock or generate 16.34% 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. Salient Alternative Beta
Performance |
| Timeline |
| Dodge Global Stock |
| Salient Alternative Beta |
Dodge Cox and Salient Alternative Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Salient Alternative
The main advantage of trading using opposite Dodge Cox and Salient Alternative positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Salient Alternative 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 Salient Alternative will offset losses from the drop in Salient Alternative'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 |
| Salient Alternative vs. Dodge Global Stock | Salient Alternative vs. Artisan Global Unconstrained | Salient Alternative vs. Dreyfusstandish Global Fixed | Salient Alternative vs. Kinetics Global Fund |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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