Correlation Between Dodge Cox and Guggenheim World
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Guggenheim World 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 Guggenheim World 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 Guggenheim World Equity, you can compare the effects of market volatilities on Dodge Cox and Guggenheim World 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 Guggenheim World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Guggenheim World.
Diversification Opportunities for Dodge Cox and Guggenheim World
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Guggenheim is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Global and Guggenheim World Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guggenheim World 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 Guggenheim World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guggenheim World Equity has no effect on the direction of Dodge Cox i.e., Dodge Cox and Guggenheim World go up and down completely randomly.
Pair Corralation between Dodge Cox and Guggenheim World
Assuming the 90 days horizon Dodge Cox Global is expected to under-perform the Guggenheim World. In addition to that, Dodge Cox is 1.29 times more volatile than Guggenheim World Equity. It trades about -0.06 of its total potential returns per unit of risk. Guggenheim World Equity is currently generating about 0.13 per unit of volatility. If you would invest 1,764 in Guggenheim World Equity on August 28, 2024 and sell it today you would earn a total of 25.00 from holding Guggenheim World Equity or generate 1.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge Cox Global vs. Guggenheim World Equity
Performance |
| Timeline |
| Dodge Cox Global |
| Guggenheim World Equity |
Dodge Cox and Guggenheim World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Guggenheim World
The main advantage of trading using opposite Dodge Cox and Guggenheim World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Guggenheim World 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 Guggenheim World will offset losses from the drop in Guggenheim World'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 |
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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