Correlation Between Dodge Cox and Westwood Largecap
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Westwood Largecap 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 Westwood Largecap 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 Westwood Largecap Value, you can compare the effects of market volatilities on Dodge Cox and Westwood Largecap 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 Westwood Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Westwood Largecap.
Diversification Opportunities for Dodge Cox and Westwood Largecap
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dodge and Westwood is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Westwood Largecap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Largecap Value 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 Westwood Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Largecap Value has no effect on the direction of Dodge Cox i.e., Dodge Cox and Westwood Largecap go up and down completely randomly.
Pair Corralation between Dodge Cox and Westwood Largecap
Assuming the 90 days horizon Dodge Cox is expected to generate 1.25 times less return on investment than Westwood Largecap. In addition to that, Dodge Cox is 1.03 times more volatile than Westwood Largecap Value. It trades about 0.2 of its total potential returns per unit of risk. Westwood Largecap Value is currently generating about 0.25 per unit of volatility. If you would invest 1,476 in Westwood Largecap Value on August 31, 2024 and sell it today you would earn a total of 72.00 from holding Westwood Largecap Value or generate 4.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dodge Cox Stock vs. Westwood Largecap Value
Performance |
Timeline |
Dodge Cox Stock |
Westwood Largecap Value |
Dodge Cox and Westwood Largecap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dodge Cox and Westwood Largecap
The main advantage of trading using opposite Dodge Cox and Westwood Largecap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Westwood Largecap 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 Westwood Largecap will offset losses from the drop in Westwood Largecap's long position.Dodge Cox vs. Fundamental Large Cap | Dodge Cox vs. T Rowe Price | Dodge Cox vs. Qs Large Cap | Dodge Cox vs. Dana Large Cap |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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