Correlation Between Dodge Cox and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Franklin Mutual 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 Mutual 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 Mutual Shares, you can compare the effects of market volatilities on Dodge Cox and Franklin Mutual 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 Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Franklin Mutual.
Diversification Opportunities for Dodge Cox and Franklin Mutual
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dodge and Franklin is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Global Stock and Franklin Mutual Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Shares 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 Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Shares has no effect on the direction of Dodge Cox i.e., Dodge Cox and Franklin Mutual go up and down completely randomly.
Pair Corralation between Dodge Cox and Franklin Mutual
Assuming the 90 days horizon Dodge Global Stock is expected to under-perform the Franklin Mutual. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge Global Stock is 1.38 times less risky than Franklin Mutual. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Franklin Mutual Shares is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,738 in Franklin Mutual Shares on August 26, 2024 and sell it today you would earn a total of 135.00 from holding Franklin Mutual Shares or generate 4.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Global Stock vs. Franklin Mutual Shares
Performance |
| Timeline |
| Dodge Global Stock |
| Franklin Mutual Shares |
Dodge Cox and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Franklin Mutual
The main advantage of trading using opposite Dodge Cox and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Franklin Mutual 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 Mutual will offset losses from the drop in Franklin Mutual'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 Mutual vs. T Rowe Price | Franklin Mutual vs. Artisan Global Unconstrained | Franklin Mutual vs. Dodge Global Stock | Franklin Mutual vs. Mirova Global Green |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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