Correlation Between Dodge Cox and Templeton Foreign
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Templeton Foreign 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 Templeton Foreign 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 Templeton Foreign Fund, you can compare the effects of market volatilities on Dodge Cox and Templeton Foreign 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 Templeton Foreign. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Templeton Foreign.
Diversification Opportunities for Dodge Cox and Templeton Foreign
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dodge and Templeton is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Templeton Foreign Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Foreign 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 Templeton Foreign. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Foreign has no effect on the direction of Dodge Cox i.e., Dodge Cox and Templeton Foreign go up and down completely randomly.
Pair Corralation between Dodge Cox and Templeton Foreign
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 0.84 times more return on investment than Templeton Foreign. However, Dodge Cox Stock is 1.19 times less risky than Templeton Foreign. It trades about 0.14 of its potential returns per unit of risk. Templeton Foreign Fund is currently generating about -0.2 per unit of risk. If you would invest 27,430 in Dodge Cox Stock on August 29, 2024 and sell it today you would earn a total of 1,226 from holding Dodge Cox Stock or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.67% |
| Values | Daily Returns |
Dodge Cox Stock vs. Templeton Foreign Fund
Performance |
| Timeline |
| Dodge Cox Stock |
| Templeton Foreign |
Dodge Cox and Templeton Foreign Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Templeton Foreign
The main advantage of trading using opposite Dodge Cox and Templeton Foreign positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Templeton Foreign 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 Templeton Foreign will offset losses from the drop in Templeton Foreign's long position.| Dodge Cox vs. Value Fund Investor | Dodge Cox vs. HUMANA INC | Dodge Cox vs. Aquagold International | Dodge Cox vs. Barloworld Ltd ADR |
| Templeton Foreign vs. Dodge Cox Stock | Templeton Foreign vs. M Large Cap | Templeton Foreign vs. Fundamental Large Cap | Templeton Foreign vs. Transamerica 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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