Correlation Between Dodge Cox and American Funds
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and American Funds 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 American Funds 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 American Funds Global, you can compare the effects of market volatilities on Dodge Cox and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and American Funds.
Diversification Opportunities for Dodge Cox and American Funds
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and American is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and American Funds Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Global 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Global has no effect on the direction of Dodge Cox i.e., Dodge Cox and American Funds go up and down completely randomly.
Pair Corralation between Dodge Cox and American Funds
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 0.85 times more return on investment than American Funds. However, Dodge Cox Stock is 1.18 times less risky than American Funds. It trades about 0.14 of its potential returns per unit of risk. American Funds Global is currently generating about 0.11 per unit of risk. If you would invest 21,939 in Dodge Cox Stock on September 14, 2024 and sell it today you would earn a total of 6,113 from holding Dodge Cox Stock or generate 27.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. American Funds Global
Performance |
| Timeline |
| Dodge Cox Stock |
| American Funds Global |
Dodge Cox and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and American Funds
The main advantage of trading using opposite Dodge Cox and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Total Return Fund |
| American Funds vs. Blackrock Lifepath Dynamic | American Funds vs. Income Fund Of | American Funds vs. Sp 500 Index | American Funds vs. Dodge Cox Stock |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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