Correlation Between Federated Porate and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Federated Porate 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 Federated Porate and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Porate Bond and Dodge Cox Stock, you can compare the effects of market volatilities on Federated Porate 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 Federated Porate with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Porate and Dodge Cox.
Diversification Opportunities for Federated Porate and Dodge Cox
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Federated and Dodge is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Federated Porate Bond and Dodge Cox Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox Stock and Federated Porate 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 Federated Porate 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 Stock has no effect on the direction of Federated Porate i.e., Federated Porate and Dodge Cox go up and down completely randomly.
Pair Corralation between Federated Porate and Dodge Cox
Assuming the 90 days horizon Federated Porate is expected to generate 2.08 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, Federated Porate Bond is 1.74 times less risky than Dodge Cox. It trades about 0.09 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 21,752 in Dodge Cox Stock on September 12, 2024 and sell it today you would earn a total of 6,378 from holding Dodge Cox Stock or generate 29.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.7% |
| Values | Daily Returns |
Federated Porate Bond vs. Dodge Cox Stock
Performance |
| Timeline |
| Federated Porate Bond |
| Dodge Cox Stock |
Federated Porate and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federated Porate and Dodge Cox
The main advantage of trading using opposite Federated Porate and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federated Porate 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.| Federated Porate vs. Columbia Real Estate | Federated Porate vs. Prudential Real Estate | Federated Porate vs. Dunham Real Estate | Federated Porate vs. Pender Real Estate |
| Dodge Cox vs. Needham Aggressive Growth | Dodge Cox vs. Alliancebernstein Global High | Dodge Cox vs. Ppm High Yield | Dodge Cox vs. Siit High Yield |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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