Correlation Between Dodge Cox and Western Asset
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Western Asset 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 Western Asset 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 Western Asset Managed, you can compare the effects of market volatilities on Dodge Cox and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Western Asset.
Diversification Opportunities for Dodge Cox and Western Asset
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dodge and Western is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Western Asset Managed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset Managed 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset Managed has no effect on the direction of Dodge Cox i.e., Dodge Cox and Western Asset go up and down completely randomly.
Pair Corralation between Dodge Cox and Western Asset
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 2.88 times more return on investment than Western Asset. However, Dodge Cox is 2.88 times more volatile than Western Asset Managed. It trades about 0.12 of its potential returns per unit of risk. Western Asset Managed is currently generating about 0.08 per unit of risk. If you would invest 20,974 in Dodge Cox Stock on September 2, 2024 and sell it today you would earn a total of 7,831 from holding Dodge Cox Stock or generate 37.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Western Asset Managed
Performance |
| Timeline |
| Dodge Cox Stock |
| Western Asset Managed |
Dodge Cox and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Western Asset
The main advantage of trading using opposite Dodge Cox and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset's long position.| Dodge Cox vs. Omni Small Cap Value | Dodge Cox vs. T Rowe Price | Dodge Cox vs. Ab Centrated Growth | Dodge Cox vs. Tax Managed Mid Small |
| Western Asset vs. Qs Growth Fund | Western Asset vs. Volumetric Fund Volumetric | Western Asset vs. Balanced Fund Investor | Western Asset vs. Omni Small Cap Value |
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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