Correlation Between Dodge Cox and Total Return
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Total Return 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 Total Return 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 Total Return Bond, you can compare the effects of market volatilities on Dodge Cox and Total Return 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 Total Return. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Total Return.
Diversification Opportunities for Dodge Cox and Total Return
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dodge and Total is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Total Return Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Total Return Bond 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 Total Return. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Total Return Bond has no effect on the direction of Dodge Cox i.e., Dodge Cox and Total Return go up and down completely randomly.
Pair Corralation between Dodge Cox and Total Return
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 2.43 times more return on investment than Total Return. However, Dodge Cox is 2.43 times more volatile than Total Return Bond. It trades about 0.29 of its potential returns per unit of risk. Total Return Bond is currently generating about 0.12 per unit of risk. If you would invest 27,403 in Dodge Cox Stock on September 4, 2024 and sell it today you would earn a total of 1,402 from holding Dodge Cox Stock or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Total Return Bond
Performance |
| Timeline |
| Dodge Cox Stock |
| Total Return Bond |
Dodge Cox and Total Return Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Total Return
The main advantage of trading using opposite Dodge Cox and Total Return positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Total Return 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 Total Return will offset losses from the drop in Total Return's long position.| Dodge Cox vs. T Rowe Price | Dodge Cox vs. T Rowe Price | Dodge Cox vs. T Rowe Price | Dodge Cox vs. T Rowe Price |
| Total Return vs. Goldman Sachs Short | Total Return vs. Sprott Gold Equity | Total Return vs. Global Gold Fund | Total Return vs. Oppenheimer Gold Special |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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