Correlation Between Dodge Cox and Fairholme Fund
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Fairholme Fund 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 Fairholme Fund 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 The Fairholme Fund, you can compare the effects of market volatilities on Dodge Cox and Fairholme Fund 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 Fairholme Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Fairholme Fund.
Diversification Opportunities for Dodge Cox and Fairholme Fund
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dodge and Fairholme is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and The Fairholme Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fairholme Fund 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 Fairholme Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fairholme Fund has no effect on the direction of Dodge Cox i.e., Dodge Cox and Fairholme Fund go up and down completely randomly.
Pair Corralation between Dodge Cox and Fairholme Fund
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 0.64 times more return on investment than Fairholme Fund. However, Dodge Cox Stock is 1.57 times less risky than Fairholme Fund. It trades about 0.02 of its potential returns per unit of risk. The Fairholme Fund is currently generating about -0.32 per unit of risk. If you would invest 27,894 in Dodge Cox Stock on September 13, 2024 and sell it today you would earn a total of 168.00 from holding Dodge Cox Stock or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. The Fairholme Fund
Performance |
| Timeline |
| Dodge Cox Stock |
| Fairholme Fund |
Dodge Cox and Fairholme Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Fairholme Fund
The main advantage of trading using opposite Dodge Cox and Fairholme Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Fairholme Fund 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 Fairholme Fund will offset losses from the drop in Fairholme Fund's long position.| Dodge Cox vs. Morningstar Unconstrained Allocation | Dodge Cox vs. Aqr Large Cap | Dodge Cox vs. Fisher Large Cap |
| Fairholme Fund vs. The Fairholme Focused | Fairholme Fund vs. Equity Income Fund | Fairholme Fund vs. Us Small Cap | Fairholme Fund vs. Infrastructure Fund Retail |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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