Correlation Between Dodge Cox and Prudential Intl
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Prudential Intl 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 Prudential Intl 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 Prudential Intl Bond, you can compare the effects of market volatilities on Dodge Cox and Prudential Intl 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 Prudential Intl. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Prudential Intl.
Diversification Opportunities for Dodge Cox and Prudential Intl
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and Prudential is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Prudential Intl Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Prudential Intl 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 Prudential Intl. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Prudential Intl Bond has no effect on the direction of Dodge Cox i.e., Dodge Cox and Prudential Intl go up and down completely randomly.
Pair Corralation between Dodge Cox and Prudential Intl
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 3.8 times more return on investment than Prudential Intl. However, Dodge Cox is 3.8 times more volatile than Prudential Intl Bond. It trades about 0.09 of its potential returns per unit of risk. Prudential Intl Bond is currently generating about 0.09 per unit of risk. If you would invest 20,609 in Dodge Cox Stock on September 3, 2024 and sell it today you would earn a total of 8,196 from holding Dodge Cox Stock or generate 39.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 48.69% |
| Values | Daily Returns |
Dodge Cox Stock vs. Prudential Intl Bond
Performance |
| Timeline |
| Dodge Cox Stock |
| Prudential Intl Bond |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dodge Cox and Prudential Intl Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Prudential Intl
The main advantage of trading using opposite Dodge Cox and Prudential Intl positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Prudential Intl 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 Prudential Intl will offset losses from the drop in Prudential Intl's long position.| Dodge Cox vs. Tekla Healthcare Opportunities | Dodge Cox vs. Health Biotchnology Portfolio | Dodge Cox vs. Eventide Healthcare Life | Dodge Cox vs. Lord Abbett Health |
| Prudential Intl vs. Dodge Cox Stock | Prudential Intl vs. Qs Large Cap | Prudential Intl vs. Avantis Large Cap | Prudential Intl vs. Aqr Large Cap |
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 Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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