Correlation Between Balanced Allocation and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Balanced Allocation 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 Balanced Allocation and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Balanced Allocation Fund and Dodge Cox Emerging, you can compare the effects of market volatilities on Balanced Allocation 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 Balanced Allocation with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Balanced Allocation and Dodge Cox.
Diversification Opportunities for Balanced Allocation and Dodge Cox
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Balanced and Dodge is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Balanced Allocation Fund 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 Balanced Allocation 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 Balanced Allocation Fund 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 Balanced Allocation i.e., Balanced Allocation and Dodge Cox go up and down completely randomly.
Pair Corralation between Balanced Allocation and Dodge Cox
Assuming the 90 days horizon Balanced Allocation Fund is expected to generate 0.78 times more return on investment than Dodge Cox. However, Balanced Allocation Fund is 1.27 times less risky than Dodge Cox. It trades about 0.15 of its potential returns per unit of risk. Dodge Cox Emerging is currently generating about 0.05 per unit of risk. If you would invest 879.00 in Balanced Allocation Fund on September 4, 2024 and sell it today you would earn a total of 29.00 from holding Balanced Allocation Fund or generate 3.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 6.46% |
| Values | Daily Returns |
Balanced Allocation Fund vs. Dodge Cox Emerging
Performance |
| Timeline |
| Balanced Allocation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Dodge Cox Emerging |
Balanced Allocation and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Balanced Allocation and Dodge Cox
The main advantage of trading using opposite Balanced Allocation and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Balanced Allocation 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.| Balanced Allocation vs. Dodge Cox Emerging | Balanced Allocation vs. Templeton Emerging Markets | Balanced Allocation vs. T Rowe Price | Balanced Allocation vs. Commodities Strategy Fund |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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