Correlation Between Dodge Cox and California High
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and California High 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 California High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Cox Stock and California High Yield Municipal, you can compare the effects of market volatilities on Dodge Cox and California High 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 California High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and California High.
Diversification Opportunities for Dodge Cox and California High
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dodge and California is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California High Yield 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 Stock are associated (or correlated) with California High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Dodge Cox i.e., Dodge Cox and California High go up and down completely randomly.
Pair Corralation between Dodge Cox and California High
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 2.94 times more return on investment than California High. However, Dodge Cox is 2.94 times more volatile than California High Yield Municipal. It trades about 0.06 of its potential returns per unit of risk. California High Yield Municipal is currently generating about 0.07 per unit of risk. If you would invest 20,044 in Dodge Cox Stock on September 20, 2024 and sell it today you would earn a total of 5,441 from holding Dodge Cox Stock or generate 27.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dodge Cox Stock vs. California High Yield Municipa
Performance |
| Timeline |
| Dodge Cox Stock |
| California High Yield |
Dodge Cox and California High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and California High
The main advantage of trading using opposite Dodge Cox and California High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, California High 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 California High will offset losses from the drop in California High's long position.| Dodge Cox vs. Angel Oak Financial | Dodge Cox vs. Prudential Jennison Financial | Dodge Cox vs. Goldman Sachs Financial | Dodge Cox vs. Blackrock Financial Institutions |
| California High vs. Scharf Global Opportunity | California High vs. Alliancebernstein Global High | California High vs. Franklin Mutual Global | California High vs. Investec Global Franchise |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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