Correlation Between NYSE Composite and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both NYSE Composite 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 NYSE Composite and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Dodge International Stock, you can compare the effects of market volatilities on NYSE Composite 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 NYSE Composite with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Dodge Cox.
Diversification Opportunities for NYSE Composite and Dodge Cox
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between NYSE and Dodge is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Dodge International Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge International Stock and NYSE Composite 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 NYSE Composite 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 International Stock has no effect on the direction of NYSE Composite i.e., NYSE Composite and Dodge Cox go up and down completely randomly.
Pair Corralation between NYSE Composite and Dodge Cox
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.84 times more return on investment than Dodge Cox. However, NYSE Composite is 1.19 times less risky than Dodge Cox. It trades about 0.11 of its potential returns per unit of risk. Dodge International Stock is currently generating about 0.05 per unit of risk. If you would invest 1,583,553 in NYSE Composite on August 28, 2024 and sell it today you would earn a total of 438,483 from holding NYSE Composite or generate 27.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Dodge International Stock
Performance |
| Timeline |
NYSE Composite and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Dodge International Stock
Pair trading matchups for Dodge Cox
Pair Trading with NYSE Composite and Dodge Cox
The main advantage of trading using opposite NYSE Composite and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite 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.| NYSE Composite vs. Vita Coco | NYSE Composite vs. Franklin Wireless Corp | NYSE Composite vs. Ambev SA ADR | NYSE Composite vs. Toro Co |
| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. The Fairholme 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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