Correlation Between Dodge Cox and First Trust/confluence
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and First Trust/confluence 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 First Trust/confluence 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 First Trustconfluence Small, you can compare the effects of market volatilities on Dodge Cox and First Trust/confluence 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 First Trust/confluence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and First Trust/confluence.
Diversification Opportunities for Dodge Cox and First Trust/confluence
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and First is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and First Trustconfluence Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust/confluence 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 First Trust/confluence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust/confluence has no effect on the direction of Dodge Cox i.e., Dodge Cox and First Trust/confluence go up and down completely randomly.
Pair Corralation between Dodge Cox and First Trust/confluence
Assuming the 90 days horizon Dodge Cox is expected to generate 1.18 times less return on investment than First Trust/confluence. But when comparing it to its historical volatility, Dodge Cox Stock is 1.42 times less risky than First Trust/confluence. It trades about 0.25 of its potential returns per unit of risk. First Trustconfluence Small is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 2,481 in First Trustconfluence Small on September 5, 2024 and sell it today you would earn a total of 143.00 from holding First Trustconfluence Small or generate 5.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dodge Cox Stock vs. First Trustconfluence Small
Performance |
| Timeline |
| Dodge Cox Stock |
| First Trust/confluence |
Dodge Cox and First Trust/confluence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and First Trust/confluence
The main advantage of trading using opposite Dodge Cox and First Trust/confluence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, First Trust/confluence 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 First Trust/confluence will offset losses from the drop in First Trust/confluence's long position.| Dodge Cox vs. Fisher Small Cap | Dodge Cox vs. Ab Small Cap | Dodge Cox vs. Ab Small Cap | Dodge Cox vs. Ancorathelen Small Mid Cap |
| First Trust/confluence vs. Nuveen Small Cap | First Trust/confluence vs. Emerald Growth Fund | First Trust/confluence vs. Emerald Growth Fund | First Trust/confluence vs. Emerald Growth Fund |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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