Correlation Between Dodge Cox and Hotchkis Wiley
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Hotchkis Wiley 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 Hotchkis Wiley 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 Hotchkis Wiley Value, you can compare the effects of market volatilities on Dodge Cox and Hotchkis Wiley 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 Hotchkis Wiley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Hotchkis Wiley.
Diversification Opportunities for Dodge Cox and Hotchkis Wiley
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dodge and Hotchkis is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Hotchkis Wiley Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotchkis Wiley Value 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 Hotchkis Wiley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotchkis Wiley Value has no effect on the direction of Dodge Cox i.e., Dodge Cox and Hotchkis Wiley go up and down completely randomly.
Pair Corralation between Dodge Cox and Hotchkis Wiley
Assuming the 90 days horizon Dodge Cox is expected to generate 1.43 times less return on investment than Hotchkis Wiley. In addition to that, Dodge Cox is 1.1 times more volatile than Hotchkis Wiley Value. It trades about 0.1 of its total potential returns per unit of risk. Hotchkis Wiley Value is currently generating about 0.16 per unit of volatility. If you would invest 4,086 in Hotchkis Wiley Value on August 24, 2024 and sell it today you would earn a total of 115.00 from holding Hotchkis Wiley Value or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Hotchkis Wiley Value
Performance |
| Timeline |
| Dodge Cox Stock |
| Hotchkis Wiley Value |
Dodge Cox and Hotchkis Wiley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Hotchkis Wiley
The main advantage of trading using opposite Dodge Cox and Hotchkis Wiley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Hotchkis Wiley 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 Hotchkis Wiley will offset losses from the drop in Hotchkis Wiley's long position.| Dodge Cox vs. Vanguard Value Index | Dodge Cox vs. American Mutual Fund | Dodge Cox vs. American Funds American | Dodge Cox vs. American Mutual Fund |
| Hotchkis Wiley vs. Hotchkis Wiley Value | Hotchkis Wiley vs. Hotchkis Wiley Small | Hotchkis Wiley vs. Hotchkis Wiley Small | Hotchkis Wiley vs. Janus Enterprise 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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