Correlation Between Dodge Cox and Franklin Emerging
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Franklin 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 Franklin 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 Franklin Emerging Market, you can compare the effects of market volatilities on Dodge Cox and Franklin 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 Franklin Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Franklin Emerging.
Diversification Opportunities for Dodge Cox and Franklin Emerging
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and Franklin is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Franklin Emerging Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Emerging Market 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 Franklin Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Emerging Market has no effect on the direction of Dodge Cox i.e., Dodge Cox and Franklin Emerging go up and down completely randomly.
Pair Corralation between Dodge Cox and Franklin Emerging
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 2.63 times more return on investment than Franklin Emerging. However, Dodge Cox is 2.63 times more volatile than Franklin Emerging Market. It trades about 0.09 of its potential returns per unit of risk. Franklin Emerging Market is currently generating about 0.17 per unit of risk. If you would invest 21,299 in Dodge Cox Stock on September 1, 2024 and sell it today you would earn a total of 7,436 from holding Dodge Cox Stock or generate 34.91% 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. Franklin Emerging Market
Performance |
| Timeline |
| Dodge Cox Stock |
| Franklin Emerging Market |
Dodge Cox and Franklin Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Franklin Emerging
The main advantage of trading using opposite Dodge Cox and Franklin Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Franklin 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 Franklin Emerging will offset losses from the drop in Franklin Emerging's long position.| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Cox Emerging | Dodge Cox vs. Dodge Balanced Fund |
| Franklin Emerging vs. Jhancock Real Estate | Franklin Emerging vs. Virtus Real Estate | Franklin Emerging vs. Dunham Real Estate | Franklin Emerging vs. Us Real Estate |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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