Correlation Between Dodge Cox and Large-cap Value
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Large-cap Value 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 Large-cap Value 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 Large Cap Value Profund, you can compare the effects of market volatilities on Dodge Cox and Large-cap Value 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 Large-cap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Large-cap Value.
Diversification Opportunities for Dodge Cox and Large-cap Value
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and LARGE-CAP is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Large Cap Value Profund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap 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 Large-cap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap Value has no effect on the direction of Dodge Cox i.e., Dodge Cox and Large-cap Value go up and down completely randomly.
Pair Corralation between Dodge Cox and Large-cap Value
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 1.12 times more return on investment than Large-cap Value. However, Dodge Cox is 1.12 times more volatile than Large Cap Value Profund. It trades about 0.12 of its potential returns per unit of risk. Large Cap Value Profund is currently generating about 0.13 per unit of risk. If you would invest 25,219 in Dodge Cox Stock on August 24, 2024 and sell it today you would earn a total of 2,859 from holding Dodge Cox Stock or generate 11.34% 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. Large Cap Value Profund
Performance |
| Timeline |
| Dodge Cox Stock |
| Large Cap Value |
Dodge Cox and Large-cap Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Large-cap Value
The main advantage of trading using opposite Dodge Cox and Large-cap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Large-cap Value 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 Large-cap Value will offset losses from the drop in Large-cap Value's long position.| Dodge Cox vs. HUMANA INC | Dodge Cox vs. Aquagold International | Dodge Cox vs. Barloworld Ltd ADR | Dodge Cox vs. Morningstar Unconstrained Allocation |
| Large-cap Value vs. Vanguard Small Cap Value | Large-cap Value vs. Vanguard Mid Cap Value | Large-cap Value vs. Vanguard Small Cap Index | Large-cap Value vs. Vanguard Emerging Markets |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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