Correlation Between Dodge Cox and Foreign Value
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Foreign Value 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 Foreign Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Cox International and Foreign Value Fund, you can compare the effects of market volatilities on Dodge Cox and Foreign Value 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 Foreign Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Foreign Value.
Diversification Opportunities for Dodge Cox and Foreign Value
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and Foreign is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox International and Foreign Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Value 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 Cox International are associated (or correlated) with Foreign Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Value has no effect on the direction of Dodge Cox i.e., Dodge Cox and Foreign Value go up and down completely randomly.
Pair Corralation between Dodge Cox and Foreign Value
Assuming the 90 days horizon Dodge Cox International is expected to generate 1.05 times more return on investment than Foreign Value. However, Dodge Cox is 1.05 times more volatile than Foreign Value Fund. It trades about 0.02 of its potential returns per unit of risk. Foreign Value Fund is currently generating about 0.01 per unit of risk. If you would invest 5,186 in Dodge Cox International on November 2, 2024 and sell it today you would earn a total of 75.00 from holding Dodge Cox International or generate 1.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.04% |
| Values | Daily Returns |
Dodge Cox International vs. Foreign Value Fund
Performance |
| Timeline |
| Dodge Cox International |
| Foreign Value |
Dodge Cox and Foreign Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Foreign Value
The main advantage of trading using opposite Dodge Cox and Foreign Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Foreign Value 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 Foreign Value will offset losses from the drop in Foreign Value's long position.| Dodge Cox vs. Federated Government Ultrashort | Dodge Cox vs. Vela Short Duration | Dodge Cox vs. Old Westbury Short Term | Dodge Cox vs. Fidelity Flex Servative |
| Foreign Value vs. Mid Cap Index | Foreign Value vs. Mid Cap Strategic | Foreign Value vs. Valic Company I | Foreign Value vs. Valic Company I |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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