Correlation Between Dodge Cox and Templeton Emerging
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Templeton Emerging 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 Emerging 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 Emerging Markets, you can compare the effects of market volatilities on Dodge Cox and Templeton Emerging 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 Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Templeton Emerging.
Diversification Opportunities for Dodge Cox and Templeton Emerging
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dodge and Templeton is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Templeton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Templeton Emerging 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 Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Templeton Emerging has no effect on the direction of Dodge Cox i.e., Dodge Cox and Templeton Emerging go up and down completely randomly.
Pair Corralation between Dodge Cox and Templeton Emerging
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 1.15 times more return on investment than Templeton Emerging. However, Dodge Cox is 1.15 times more volatile than Templeton Emerging Markets. It trades about 0.08 of its potential returns per unit of risk. Templeton Emerging Markets is currently generating about 0.04 per unit of risk. If you would invest 20,537 in Dodge Cox Stock on November 5, 2024 and sell it today you would earn a total of 6,767 from holding Dodge Cox Stock or generate 32.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Stock vs. Templeton Emerging Markets
Performance |
| Timeline |
| Dodge Cox Stock |
| Templeton Emerging |
Dodge Cox and Templeton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Templeton Emerging
The main advantage of trading using opposite Dodge Cox and Templeton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Templeton Emerging 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 Emerging will offset losses from the drop in Templeton Emerging's long position.| Dodge Cox vs. Scharf Global Opportunity | Dodge Cox vs. Us Global Investors | Dodge Cox vs. T Rowe Price | Dodge Cox vs. Kinetics Global Fund |
| Templeton Emerging vs. Invesco Gold Special | Templeton Emerging vs. Short Precious Metals | Templeton Emerging vs. Gold And Precious | Templeton Emerging vs. International Investors Gold |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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