Correlation Between Templeton Global and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Templeton Global 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 Templeton Global and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Templeton Global Bond and Dodge Global Bond, you can compare the effects of market volatilities on Templeton Global 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 Templeton Global with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Templeton Global and Dodge Cox.
Diversification Opportunities for Templeton Global and Dodge Cox
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Templeton and Dodge is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Templeton Global Bond and Dodge Global Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Global Bond and Templeton Global 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 Templeton Global 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 Global Bond has no effect on the direction of Templeton Global i.e., Templeton Global and Dodge Cox go up and down completely randomly.
Pair Corralation between Templeton Global and Dodge Cox
Assuming the 90 days horizon Templeton Global Bond is expected to under-perform the Dodge Cox. In addition to that, Templeton Global is 1.86 times more volatile than Dodge Global Bond. It trades about -0.09 of its total potential returns per unit of risk. Dodge Global Bond is currently generating about 0.04 per unit of volatility. If you would invest 1,091 in Dodge Global Bond on August 27, 2024 and sell it today you would earn a total of 3.00 from holding Dodge Global Bond or generate 0.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Templeton Global Bond vs. Dodge Global Bond
Performance |
| Timeline |
| Templeton Global Bond |
| Dodge Global Bond |
Templeton Global and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Templeton Global and Dodge Cox
The main advantage of trading using opposite Templeton Global and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Templeton Global 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.| Templeton Global vs. Lord Abbett Diversified | Templeton Global vs. Ab Value Fund | Templeton Global vs. Ab E Opportunities | Templeton Global vs. Qs Growth Fund |
| Dodge Cox vs. Dodge Global Stock | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Hotchkis Wiley High | Dodge Cox vs. T Rowe Price |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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