Correlation Between First Trust and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust Specialty and Dodge Cox Stock, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Dodge Cox.
Diversification Opportunities for First Trust and Dodge Cox
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between First and Dodge is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding First Trust Specialty 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 First Trust 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 First Trust Specialty 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 First Trust i.e., First Trust and Dodge Cox go up and down completely randomly.
Pair Corralation between First Trust and Dodge Cox
Considering the 90-day investment horizon First Trust is expected to generate 1.1 times less return on investment than Dodge Cox. In addition to that, First Trust is 1.55 times more volatile than Dodge Cox Stock. It trades about 0.19 of its total potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.32 per unit of volatility. If you would invest 26,051 in Dodge Cox Stock on October 25, 2024 and sell it today you would earn a total of 1,172 from holding Dodge Cox Stock or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Trust Specialty vs. Dodge Cox Stock
Performance |
| Timeline |
| First Trust Specialty |
| Dodge Cox Stock |
First Trust and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Dodge Cox
The main advantage of trading using opposite First Trust and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. Munivest Fund | First Trust vs. MFS High Income | First Trust vs. Franklin Templeton Limited | First Trust vs. MFS Investment Grade |
| Dodge Cox vs. John Hancock Financial | Dodge Cox vs. Davis Financial Fund | Dodge Cox vs. First Trust Specialty | 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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