Correlation Between Dodge Cox and Federated Short-term
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Federated Short-term 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 Federated Short-term 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 Federated Short Term Income, you can compare the effects of market volatilities on Dodge Cox and Federated Short-term 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 Federated Short-term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Federated Short-term.
Diversification Opportunities for Dodge Cox and Federated Short-term
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dodge and Federated is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Federated Short Term Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Short Term 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 Federated Short-term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Short Term has no effect on the direction of Dodge Cox i.e., Dodge Cox and Federated Short-term go up and down completely randomly.
Pair Corralation between Dodge Cox and Federated Short-term
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 7.4 times more return on investment than Federated Short-term. However, Dodge Cox is 7.4 times more volatile than Federated Short Term Income. It trades about 0.28 of its potential returns per unit of risk. Federated Short Term Income is currently generating about 0.05 per unit of risk. If you would invest 27,361 in Dodge Cox Stock on September 1, 2024 and sell it today you would earn a total of 1,444 from holding Dodge Cox Stock or generate 5.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dodge Cox Stock vs. Federated Short Term Income
Performance |
| Timeline |
| Dodge Cox Stock |
| Federated Short Term |
Dodge Cox and Federated Short-term Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Federated Short-term
The main advantage of trading using opposite Dodge Cox and Federated Short-term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Federated Short-term 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 Federated Short-term will offset losses from the drop in Federated Short-term'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 |
| Federated Short-term vs. Federated Emerging Market | Federated Short-term vs. Federated Mdt All | Federated Short-term vs. Federated Mdt Balanced | Federated Short-term vs. Federated Global Allocation |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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