Correlation Between Dodge Cox and Balanced Allocation
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Balanced Allocation 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 Balanced Allocation 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 Balanced Allocation Fund, you can compare the effects of market volatilities on Dodge Cox and Balanced Allocation 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 Balanced Allocation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Balanced Allocation.
Diversification Opportunities for Dodge Cox and Balanced Allocation
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and Balanced is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Balanced Allocation Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Allocation 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 Balanced Allocation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Allocation has no effect on the direction of Dodge Cox i.e., Dodge Cox and Balanced Allocation go up and down completely randomly.
Pair Corralation between Dodge Cox and Balanced Allocation
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 1.93 times more return on investment than Balanced Allocation. However, Dodge Cox is 1.93 times more volatile than Balanced Allocation Fund. It trades about 0.07 of its potential returns per unit of risk. Balanced Allocation Fund is currently generating about 0.02 per unit of risk. If you would invest 26,411 in Dodge Cox Stock on October 26, 2024 and sell it today you would earn a total of 812.00 from holding Dodge Cox Stock or generate 3.07% 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. Balanced Allocation Fund
Performance |
| Timeline |
| Dodge Cox Stock |
| Balanced Allocation |
Dodge Cox and Balanced Allocation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Balanced Allocation
The main advantage of trading using opposite Dodge Cox and Balanced Allocation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Balanced Allocation 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 Balanced Allocation will offset losses from the drop in Balanced Allocation's long position.| Dodge Cox vs. William Blair Small | Dodge Cox vs. Ultramid Cap Profund Ultramid Cap | Dodge Cox vs. Lsv Small Cap | Dodge Cox vs. Great West Loomis Sayles |
| Balanced Allocation vs. The Equity Growth | Balanced Allocation vs. Rational Defensive Growth | Balanced Allocation vs. L Abbett Growth | Balanced Allocation vs. Riverparknext Century Growth |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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