Correlation Between Dodge Cox and Brandes Global
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Brandes Global 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 Brandes Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Cox Global and Brandes Global Equity, you can compare the effects of market volatilities on Dodge Cox and Brandes Global 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 Brandes Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Brandes Global.
Diversification Opportunities for Dodge Cox and Brandes Global
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Brandes is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Global and Brandes Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Global 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 Global are associated (or correlated) with Brandes Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Global Equity has no effect on the direction of Dodge Cox i.e., Dodge Cox and Brandes Global go up and down completely randomly.
Pair Corralation between Dodge Cox and Brandes Global
Assuming the 90 days horizon Dodge Cox is expected to generate 1.78 times less return on investment than Brandes Global. But when comparing it to its historical volatility, Dodge Cox Global is 1.05 times less risky than Brandes Global. It trades about 0.04 of its potential returns per unit of risk. Brandes Global Equity is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2,966 in Brandes Global Equity on September 1, 2024 and sell it today you would earn a total of 175.00 from holding Brandes Global Equity or generate 5.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
Dodge Cox Global vs. Brandes Global Equity
Performance |
| Timeline |
| Dodge Cox Global |
| Brandes Global Equity |
Dodge Cox and Brandes Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Brandes Global
The main advantage of trading using opposite Dodge Cox and Brandes Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Brandes Global 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 Brandes Global will offset losses from the drop in Brandes Global's long position.| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Cox Emerging | Dodge Cox vs. Dodge Balanced Fund |
| Brandes Global vs. Brandes Small Cap | Brandes Global vs. Brandes Small Cap | Brandes Global vs. Brandes Small Cap | Brandes Global vs. Brandes E Plus |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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