Correlation Between Europac International and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Europac International 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 Europac International and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Europac International Bond and Dodge Cox Emerging, you can compare the effects of market volatilities on Europac International 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 Europac International with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Europac International and Dodge Cox.
Diversification Opportunities for Europac International and Dodge Cox
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Europac and Dodge is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Europac International Bond 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 Europac International 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 Europac International Bond 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 Europac International i.e., Europac International and Dodge Cox go up and down completely randomly.
Pair Corralation between Europac International and Dodge Cox
Assuming the 90 days horizon Europac International is expected to generate 3.39 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, Europac International Bond is 2.56 times less risky than Dodge Cox. It trades about 0.04 of its potential returns per unit of risk. Dodge Cox Emerging is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 735.00 in Dodge Cox Emerging on September 4, 2024 and sell it today you would earn a total of 165.00 from holding Dodge Cox Emerging or generate 22.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Europac International Bond vs. Dodge Cox Emerging
Performance |
| Timeline |
| Europac International |
| Dodge Cox Emerging |
Europac International and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Europac International and Dodge Cox
The main advantage of trading using opposite Europac International and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Europac International 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 Europac International Bond 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. Dodge Stock Fund | Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Global Stock |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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