Correlation Between Dodge Cox and California Intermediate
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and California Intermediate 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 Intermediate 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 Intermediate Term Tax Free, you can compare the effects of market volatilities on Dodge Cox and California Intermediate 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 Intermediate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and California Intermediate.
Diversification Opportunities for Dodge Cox and California Intermediate
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dodge and California is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and California Intermediate Term T in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Intermediate 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 Intermediate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Intermediate has no effect on the direction of Dodge Cox i.e., Dodge Cox and California Intermediate go up and down completely randomly.
Pair Corralation between Dodge Cox and California Intermediate
Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the California Intermediate. In addition to that, Dodge Cox is 3.75 times more volatile than California Intermediate Term Tax Free. It trades about -0.18 of its total potential returns per unit of risk. California Intermediate Term Tax Free is currently generating about -0.36 per unit of volatility. If you would invest 1,132 in California Intermediate Term Tax Free on October 11, 2024 and sell it today you would lose (17.00) from holding California Intermediate Term Tax Free or give up 1.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Dodge Cox Stock vs. California Intermediate Term T
Performance |
| Timeline |
| Dodge Cox Stock |
| California Intermediate |
Dodge Cox and California Intermediate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and California Intermediate
The main advantage of trading using opposite Dodge Cox and California Intermediate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, California Intermediate 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 Intermediate will offset losses from the drop in California Intermediate's long position.| Dodge Cox vs. Hewitt Money Market | Dodge Cox vs. Putnam Money Market | Dodge Cox vs. Ab Government Exchange | Dodge Cox vs. Edward Jones Money |
| California Intermediate vs. Avantis Large Cap | California Intermediate vs. Dodge Cox Stock | California Intermediate vs. Fundamental Large Cap | California Intermediate vs. Profunds Large Cap Growth |
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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