Correlation Between Shelton Emerging and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Shelton Emerging and Dodge Cox 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 Shelton Emerging and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shelton Emerging Markets and Dodge Cox Emerging, you can compare the effects of market volatilities on Shelton Emerging and Dodge Cox 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 Shelton Emerging with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Emerging and Dodge Cox.
Diversification Opportunities for Shelton Emerging and Dodge Cox
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Shelton and Dodge is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets and Dodge Cox Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox Emerging and Shelton Emerging 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 Shelton Emerging Markets are associated (or correlated) with Dodge Cox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Cox Emerging has no effect on the direction of Shelton Emerging i.e., Shelton Emerging and Dodge Cox go up and down completely randomly.
Pair Corralation between Shelton Emerging and Dodge Cox
Assuming the 90 days horizon Shelton Emerging Markets is expected to generate 1.28 times more return on investment than Dodge Cox. However, Shelton Emerging is 1.28 times more volatile than Dodge Cox Emerging. It trades about -0.12 of its potential returns per unit of risk. Dodge Cox Emerging is currently generating about -0.16 per unit of risk. If you would invest 1,803 in Shelton Emerging Markets on September 1, 2024 and sell it today you would lose (39.00) from holding Shelton Emerging Markets or give up 2.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Shelton Emerging Markets vs. Dodge Cox Emerging
Performance |
| Timeline |
| Shelton Emerging Markets |
| Dodge Cox Emerging |
Shelton Emerging and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelton Emerging and Dodge Cox
The main advantage of trading using opposite Shelton Emerging and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Emerging position performs unexpectedly, Dodge Cox 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 Dodge Cox will offset losses from the drop in Dodge Cox's long position.The idea behind Shelton Emerging Markets and Dodge Cox Emerging pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dodge Cox vs. Adams Diversified Equity | Dodge Cox vs. Delaware Limited Term Diversified | Dodge Cox vs. Fidelity Advisor Diversified | Dodge Cox vs. American Century Diversified |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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