Correlation Between Dodge Cox and Smead Value
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Smead Value 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 Smead Value 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 Smead Value Fund, you can compare the effects of market volatilities on Dodge Cox and Smead Value 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 Smead Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Smead Value.
Diversification Opportunities for Dodge Cox and Smead Value
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dodge and Smead is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Smead Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead Value Fund 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 Smead Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead Value Fund has no effect on the direction of Dodge Cox i.e., Dodge Cox and Smead Value go up and down completely randomly.
Pair Corralation between Dodge Cox and Smead Value
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 1.1 times more return on investment than Smead Value. However, Dodge Cox is 1.1 times more volatile than Smead Value Fund. It trades about 0.29 of its potential returns per unit of risk. Smead Value Fund is currently generating about 0.23 per unit of risk. If you would invest 27,403 in Dodge Cox Stock on September 3, 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 Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Smead Value Fund
Performance |
| Timeline |
| Dodge Cox Stock |
| Smead Value Fund |
Dodge Cox and Smead Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Smead Value
The main advantage of trading using opposite Dodge Cox and Smead Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Smead Value 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 Smead Value will offset losses from the drop in Smead Value'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 |
| Smead Value vs. Dodge Cox Stock | Smead Value vs. American Funds American | Smead Value vs. American Funds American | Smead Value vs. American Mutual Fund |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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