Correlation Between Dodge Cox and M Large
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and M Large 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 M Large 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 M Large Cap, you can compare the effects of market volatilities on Dodge Cox and M Large 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 M Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and M Large.
Diversification Opportunities for Dodge Cox and M Large
Very poor diversification
The 3 months correlation between Dodge and MTCGX is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and M Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M Large Cap 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 M Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M Large Cap has no effect on the direction of Dodge Cox i.e., Dodge Cox and M Large go up and down completely randomly.
Pair Corralation between Dodge Cox and M Large
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 0.82 times more return on investment than M Large. However, Dodge Cox Stock is 1.23 times less risky than M Large. It trades about 0.27 of its potential returns per unit of risk. M Large Cap is currently generating about 0.22 per unit of risk. If you would invest 27,361 in Dodge Cox Stock on September 1, 2024 and sell it today you would earn a total of 1,374 from holding Dodge Cox Stock or generate 5.02% 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. M Large Cap
Performance |
| Timeline |
| Dodge Cox Stock |
| M Large Cap |
Dodge Cox and M Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and M Large
The main advantage of trading using opposite Dodge Cox and M Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, M Large 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 M Large will offset losses from the drop in M Large's long position.| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Cox Emerging | Dodge Cox vs. Dodge Balanced Fund |
| M Large vs. Government Securities Fund | M Large vs. Inverse Government Long | M Large vs. Dws Government Money | M Large vs. Dreyfus Government Cash |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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