Correlation Between Dodge Cox and Multi Index
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Multi Index 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 Multi Index 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 Multi Index 2030 Lifetime, you can compare the effects of market volatilities on Dodge Cox and Multi Index 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 Multi Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Multi Index.
Diversification Opportunities for Dodge Cox and Multi Index
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Multi is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Multi Index 2030 Lifetime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multi Index 2030 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 Multi Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multi Index 2030 has no effect on the direction of Dodge Cox i.e., Dodge Cox and Multi Index go up and down completely randomly.
Pair Corralation between Dodge Cox and Multi Index
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 1.39 times more return on investment than Multi Index. However, Dodge Cox is 1.39 times more volatile than Multi Index 2030 Lifetime. It trades about 0.09 of its potential returns per unit of risk. Multi Index 2030 Lifetime is currently generating about 0.09 per unit of risk. If you would invest 19,823 in Dodge Cox Stock on September 12, 2024 and sell it today you would earn a total of 8,307 from holding Dodge Cox Stock or generate 41.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Dodge Cox Stock vs. Multi Index 2030 Lifetime
Performance |
| Timeline |
| Dodge Cox Stock |
| Multi Index 2030 |
Dodge Cox and Multi Index Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Multi Index
The main advantage of trading using opposite Dodge Cox and Multi Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Multi Index 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 Multi Index will offset losses from the drop in Multi Index's long position.| Dodge Cox vs. Needham Aggressive Growth | Dodge Cox vs. Alliancebernstein Global High | Dodge Cox vs. Ppm High Yield | Dodge Cox vs. Siit High Yield |
| Multi Index vs. Vanguard Target Retirement | Multi Index vs. Fidelity Freedom 2030 | Multi Index vs. HUMANA INC | Multi Index vs. Barloworld Ltd ADR |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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