Correlation Between Dodge Cox and Northeast Investors
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Northeast Investors 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 Northeast Investors 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 Northeast Investors Trust, you can compare the effects of market volatilities on Dodge Cox and Northeast Investors 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 Northeast Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Northeast Investors.
Diversification Opportunities for Dodge Cox and Northeast Investors
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dodge and Northeast is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Northeast Investors Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northeast Investors Trust 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 Northeast Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northeast Investors Trust has no effect on the direction of Dodge Cox i.e., Dodge Cox and Northeast Investors go up and down completely randomly.
Pair Corralation between Dodge Cox and Northeast Investors
Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the Northeast Investors. In addition to that, Dodge Cox is 1.06 times more volatile than Northeast Investors Trust. It trades about -0.17 of its total potential returns per unit of risk. Northeast Investors Trust is currently generating about -0.18 per unit of volatility. If you would invest 373.00 in Northeast Investors Trust on September 14, 2024 and sell it today you would lose (6.00) from holding Northeast Investors Trust or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Northeast Investors Trust
Performance |
| Timeline |
| Dodge Cox Stock |
| Northeast Investors Trust |
Dodge Cox and Northeast Investors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Northeast Investors
The main advantage of trading using opposite Dodge Cox and Northeast Investors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Northeast Investors 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 Northeast Investors will offset losses from the drop in Northeast Investors' 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 |
| Northeast Investors vs. Wasatch Greater China | Northeast Investors vs. American Funds Global | Northeast Investors vs. Vanguard Small Cap Index | Northeast Investors vs. American Funds Tax Advantaged |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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