Correlation Between Putnam Equity and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Putnam Equity 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 Putnam Equity and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Putnam Equity Income and Dodge Cox Stock, you can compare the effects of market volatilities on Putnam Equity 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 Putnam Equity with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam Equity and Dodge Cox.
Diversification Opportunities for Putnam Equity and Dodge Cox
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Putnam and Dodge is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Putnam Equity Income 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 Putnam Equity 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 Putnam Equity Income 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 Putnam Equity i.e., Putnam Equity and Dodge Cox go up and down completely randomly.
Pair Corralation between Putnam Equity and Dodge Cox
Assuming the 90 days horizon Putnam Equity is expected to generate 1.15 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, Putnam Equity Income is 1.17 times less risky than Dodge Cox. It trades about 0.15 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 27,430 in Dodge Cox Stock on August 31, 2024 and sell it today you would earn a total of 1,305 from holding Dodge Cox Stock or generate 4.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Putnam Equity Income vs. Dodge Cox Stock
Performance |
| Timeline |
| Putnam Equity Income |
| Dodge Cox Stock |
Putnam Equity and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Putnam Equity and Dodge Cox
The main advantage of trading using opposite Putnam Equity and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam Equity 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.| Putnam Equity vs. Dodge Cox Stock | Putnam Equity vs. American Mutual Fund | Putnam Equity vs. American Funds American | Putnam Equity vs. American Funds American |
| Dodge Cox vs. Fundamental Large Cap | Dodge Cox vs. T Rowe Price | Dodge Cox vs. Qs Large Cap | Dodge Cox vs. Dana Large Cap |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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