Correlation Between Dodge Cox and Edgar Lomax
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Edgar Lomax 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 Edgar Lomax 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 Edgar Lomax Value, you can compare the effects of market volatilities on Dodge Cox and Edgar Lomax 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 Edgar Lomax. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Edgar Lomax.
Diversification Opportunities for Dodge Cox and Edgar Lomax
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and Edgar is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Edgar Lomax Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgar Lomax 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 Edgar Lomax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgar Lomax Value has no effect on the direction of Dodge Cox i.e., Dodge Cox and Edgar Lomax go up and down completely randomly.
Pair Corralation between Dodge Cox and Edgar Lomax
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 1.04 times more return on investment than Edgar Lomax. However, Dodge Cox is 1.04 times more volatile than Edgar Lomax Value. It trades about 0.15 of its potential returns per unit of risk. Edgar Lomax Value is currently generating about 0.16 per unit of risk. If you would invest 27,710 in Dodge Cox Stock on August 27, 2024 and sell it today you would earn a total of 817.00 from holding Dodge Cox Stock or generate 2.95% 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. Edgar Lomax Value
Performance |
| Timeline |
| Dodge Cox Stock |
| Edgar Lomax Value |
Dodge Cox and Edgar Lomax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Edgar Lomax
The main advantage of trading using opposite Dodge Cox and Edgar Lomax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Edgar Lomax 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 Edgar Lomax will offset losses from the drop in Edgar Lomax's long position.| Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Total Return Fund |
| Edgar Lomax vs. Nationwide Small Cap | Edgar Lomax vs. Nationwide International Index | Edgar Lomax vs. Nationwide Mid Cap | Edgar Lomax vs. Nationwide Sp 500 |
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 CEOs Directory module to screen CEOs from public companies around the world.
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