Correlation Between Dodge Cox and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Franklin Mutual 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 Franklin Mutual 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 Franklin Mutual Global, you can compare the effects of market volatilities on Dodge Cox and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Franklin Mutual.
Diversification Opportunities for Dodge Cox and Franklin Mutual
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Franklin is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Global and Franklin Mutual Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Global 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 Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Global has no effect on the direction of Dodge Cox i.e., Dodge Cox and Franklin Mutual go up and down completely randomly.
Pair Corralation between Dodge Cox and Franklin Mutual
Assuming the 90 days horizon Dodge Cox Global is expected to generate 1.0 times more return on investment than Franklin Mutual. However, Dodge Cox is 1.0 times more volatile than Franklin Mutual Global. It trades about 0.07 of its potential returns per unit of risk. Franklin Mutual Global is currently generating about 0.04 per unit of risk. If you would invest 1,257 in Dodge Cox Global on September 2, 2024 and sell it today you would earn a total of 397.00 from holding Dodge Cox Global or generate 31.58% 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. Franklin Mutual Global
Performance |
| Timeline |
| Dodge Cox Global |
| Franklin Mutual Global |
Dodge Cox and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and Franklin Mutual
The main advantage of trading using opposite Dodge Cox and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual's long position.| Dodge Cox vs. Thrivent Income Fund | Dodge Cox vs. Touchstone Premium Yield | Dodge Cox vs. Federated Ultrashort Bond | Dodge Cox vs. Ambrus Core Bond |
| Franklin Mutual vs. Strategic Allocation Moderate | Franklin Mutual vs. Franklin Lifesmart Retirement | Franklin Mutual vs. Franklin Lifesmart Retirement | Franklin Mutual vs. Calvert Moderate Allocation |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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