Correlation Between Dodge Cox and Invesco Emerging
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Invesco Emerging 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 Invesco Emerging 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 Invesco Emerging Markets, you can compare the effects of market volatilities on Dodge Cox and Invesco Emerging 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 Invesco Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Invesco Emerging.
Diversification Opportunities for Dodge Cox and Invesco Emerging
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and Invesco is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Invesco Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Invesco Emerging Markets 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 Invesco Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Invesco Emerging Markets has no effect on the direction of Dodge Cox i.e., Dodge Cox and Invesco Emerging go up and down completely randomly.
Pair Corralation between Dodge Cox and Invesco Emerging
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 1.56 times more return on investment than Invesco Emerging. However, Dodge Cox is 1.56 times more volatile than Invesco Emerging Markets. It trades about 0.1 of its potential returns per unit of risk. Invesco Emerging Markets is currently generating about -0.01 per unit of risk. If you would invest 23,396 in Dodge Cox Stock on December 2, 2024 and sell it today you would earn a total of 4,131 from holding Dodge Cox Stock or generate 17.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Invesco Emerging Markets
Performance |
| Timeline |
| Dodge Cox Stock |
| Invesco Emerging Markets |
Dodge Cox and Invesco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Invesco Emerging
The main advantage of trading using opposite Dodge Cox and Invesco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Invesco Emerging 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 Invesco Emerging will offset losses from the drop in Invesco Emerging's long position.| Dodge Cox vs. Virtus Multi Sector Short | Dodge Cox vs. Seix Govt Sec | Dodge Cox vs. Blackrock Global Longshort | Dodge Cox vs. Alpine Ultra Short |
| Invesco Emerging vs. Federated Hermes Conservative | Invesco Emerging vs. Prudential Core Conservative | Invesco Emerging vs. Jhancock Diversified Macro | Invesco Emerging vs. Aqr Diversified Arbitrage |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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