Correlation Between Large-cap Growth and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Large-cap Growth 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 Large-cap Growth and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Large Cap Growth Profund and Dodge Cox Stock, you can compare the effects of market volatilities on Large-cap Growth 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 Large-cap Growth with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Large-cap Growth and Dodge Cox.
Diversification Opportunities for Large-cap Growth and Dodge Cox
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between LARGE-CAP and Dodge is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Large Cap Growth Profund 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 Large-cap Growth 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 Large Cap Growth Profund 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 Large-cap Growth i.e., Large-cap Growth and Dodge Cox go up and down completely randomly.
Pair Corralation between Large-cap Growth and Dodge Cox
Assuming the 90 days horizon Large-cap Growth is expected to generate 2.73 times less return on investment than Dodge Cox. In addition to that, Large-cap Growth is 1.57 times more volatile than Dodge Cox Stock. It trades about 0.07 of its total potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.31 per unit of volatility. If you would invest 26,104 in Dodge Cox Stock on October 26, 2024 and sell it today you would earn a total of 1,119 from holding Dodge Cox Stock or generate 4.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Large Cap Growth Profund vs. Dodge Cox Stock
Performance |
| Timeline |
| Large Cap Growth |
| Dodge Cox Stock |
Large-cap Growth and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Large-cap Growth and Dodge Cox
The main advantage of trading using opposite Large-cap Growth and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Large-cap Growth 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.| Large-cap Growth vs. Hsbc Government Money | Large-cap Growth vs. Virtus Seix Government | Large-cap Growth vs. Intermediate Government Bond | Large-cap Growth vs. Inverse Government Long |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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