Correlation Between Dodge Cox and Lifex Inflation
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Lifex Inflation 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 Lifex Inflation 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 Lifex Inflation Protected Income, you can compare the effects of market volatilities on Dodge Cox and Lifex Inflation 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 Lifex Inflation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Lifex Inflation.
Diversification Opportunities for Dodge Cox and Lifex Inflation
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Lifex is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Lifex Inflation Protected Inco in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifex Inflation Prot 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 Lifex Inflation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifex Inflation Prot has no effect on the direction of Dodge Cox i.e., Dodge Cox and Lifex Inflation go up and down completely randomly.
Pair Corralation between Dodge Cox and Lifex Inflation
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 1.74 times more return on investment than Lifex Inflation. However, Dodge Cox is 1.74 times more volatile than Lifex Inflation Protected Income. It trades about 0.1 of its potential returns per unit of risk. Lifex Inflation Protected Income is currently generating about 0.02 per unit of risk. If you would invest 22,396 in Dodge Cox Stock on September 12, 2024 and sell it today you would earn a total of 5,734 from holding Dodge Cox Stock or generate 25.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 33.24% |
| Values | Daily Returns |
Dodge Cox Stock vs. Lifex Inflation Protected Inco
Performance |
| Timeline |
| Dodge Cox Stock |
| Lifex Inflation Prot |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dodge Cox and Lifex Inflation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Lifex Inflation
The main advantage of trading using opposite Dodge Cox and Lifex Inflation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Lifex Inflation 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 Lifex Inflation will offset losses from the drop in Lifex Inflation'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 |
| Lifex Inflation vs. Lord Abbett Affiliated | Lifex Inflation vs. Qs Large Cap | Lifex Inflation vs. Touchstone Large Cap | Lifex Inflation vs. Dodge Cox Stock |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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