Correlation Between Dodge Cox and Teton Westwood
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Teton Westwood 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 Teton Westwood 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 Teton Westwood Equity, you can compare the effects of market volatilities on Dodge Cox and Teton Westwood 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 Teton Westwood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Teton Westwood.
Diversification Opportunities for Dodge Cox and Teton Westwood
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dodge and Teton is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Teton Westwood Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Westwood Equity 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 Teton Westwood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Westwood Equity has no effect on the direction of Dodge Cox i.e., Dodge Cox and Teton Westwood go up and down completely randomly.
Pair Corralation between Dodge Cox and Teton Westwood
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 0.27 times more return on investment than Teton Westwood. However, Dodge Cox Stock is 3.69 times less risky than Teton Westwood. It trades about -0.17 of its potential returns per unit of risk. Teton Westwood Equity is currently generating about -0.24 per unit of risk. If you would invest 28,522 in Dodge Cox Stock on September 13, 2024 and sell it today you would lose (460.00) from holding Dodge Cox Stock or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dodge Cox Stock vs. Teton Westwood Equity
Performance |
| Timeline |
| Dodge Cox Stock |
| Teton Westwood Equity |
Dodge Cox and Teton Westwood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Teton Westwood
The main advantage of trading using opposite Dodge Cox and Teton Westwood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Teton Westwood 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 Teton Westwood will offset losses from the drop in Teton Westwood's long position.| Dodge Cox vs. Morningstar Unconstrained Allocation | Dodge Cox vs. Aqr Large Cap | Dodge Cox vs. Fisher Large Cap |
| Teton Westwood vs. Teton Westwood Balanced | Teton Westwood vs. Teton Westwood Small | Teton Westwood vs. The Gabelli Asset | Teton Westwood vs. Teton Westwood Mighty |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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