Correlation Between Fm Investments and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Fm Investments 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 Fm Investments and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fm Investments Large and Dodge Cox Stock, you can compare the effects of market volatilities on Fm Investments 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 Fm Investments with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fm Investments and Dodge Cox.
Diversification Opportunities for Fm Investments and Dodge Cox
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between IAFLX and Dodge is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Fm Investments Large 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 Fm Investments 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 Fm Investments Large 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 Fm Investments i.e., Fm Investments and Dodge Cox go up and down completely randomly.
Pair Corralation between Fm Investments and Dodge Cox
Assuming the 90 days horizon Fm Investments Large is expected to generate 1.74 times more return on investment than Dodge Cox. However, Fm Investments is 1.74 times more volatile than Dodge Cox Stock. It trades about 0.11 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.11 per unit of risk. If you would invest 1,477 in Fm Investments Large on September 14, 2024 and sell it today you would earn a total of 507.00 from holding Fm Investments Large or generate 34.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fm Investments Large vs. Dodge Cox Stock
Performance |
| Timeline |
| Fm Investments Large |
| Dodge Cox Stock |
Fm Investments and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fm Investments and Dodge Cox
The main advantage of trading using opposite Fm Investments and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fm Investments 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 Fm Investments Large and Dodge Cox Stock 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 International Stock | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Total Return Fund |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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