Correlation Between Total Return and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Total Return 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 Total Return and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Total Return Fund and Dodge Cox Stock, you can compare the effects of market volatilities on Total Return 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 Total Return with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Total Return and Dodge Cox.
Diversification Opportunities for Total Return and Dodge Cox
-0.74 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Total and Dodge is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Total Return Fund 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 Total Return 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 Total Return 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 Stock has no effect on the direction of Total Return i.e., Total Return and Dodge Cox go up and down completely randomly.
Pair Corralation between Total Return and Dodge Cox
Assuming the 90 days horizon Total Return is expected to generate 4.02 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, Total Return Fund is 1.87 times less risky than Dodge Cox. It trades about 0.04 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 20,228 in Dodge Cox Stock on August 30, 2024 and sell it today you would earn a total of 8,428 from holding Dodge Cox Stock or generate 41.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Total Return Fund vs. Dodge Cox Stock
Performance |
| Timeline |
| Total Return |
| Dodge Cox Stock |
Total Return and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Total Return and Dodge Cox
The main advantage of trading using opposite Total Return and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Total Return 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.| Total Return vs. Vanguard Institutional Index | Total Return vs. Dodge Stock Fund | Total Return vs. Europacific Growth Fund | Total Return vs. Real Return Fund |
| Dodge Cox vs. Value Fund Investor | Dodge Cox vs. HUMANA INC | Dodge Cox vs. Aquagold International | Dodge Cox vs. Barloworld Ltd ADR |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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