Correlation Between Dodge Cox and International Investors
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and International Investors 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 International Investors 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 International Investors Gold, you can compare the effects of market volatilities on Dodge Cox and International Investors 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 International Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and International Investors.
Diversification Opportunities for Dodge Cox and International Investors
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dodge and International is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and International Investors Gold in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Investors 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 International Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Investors has no effect on the direction of Dodge Cox i.e., Dodge Cox and International Investors go up and down completely randomly.
Pair Corralation between Dodge Cox and International Investors
Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the International Investors. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge Cox Stock is 3.58 times less risky than International Investors. The mutual fund trades about -0.17 of its potential returns per unit of risk. The International Investors Gold is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,155 in International Investors Gold on September 13, 2024 and sell it today you would earn a total of 98.00 from holding International Investors Gold or generate 8.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. International Investors Gold
Performance |
| Timeline |
| Dodge Cox Stock |
| International Investors |
Dodge Cox and International Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and International Investors
The main advantage of trading using opposite Dodge Cox and International Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, International Investors 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 International Investors will offset losses from the drop in International Investors' long position.| Dodge Cox vs. Morningstar Unconstrained Allocation | Dodge Cox vs. Aqr Large Cap | Dodge Cox vs. Fisher Large Cap |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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