Correlation Between Banking Fund and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Banking Fund 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 Banking Fund and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Banking Fund Class and Dodge Cox Stock, you can compare the effects of market volatilities on Banking Fund 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 Banking Fund with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Banking Fund and Dodge Cox.
Diversification Opportunities for Banking Fund and Dodge Cox
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Banking and Dodge is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Banking Fund Class 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 Banking Fund 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 Banking Fund Class 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 Banking Fund i.e., Banking Fund and Dodge Cox go up and down completely randomly.
Pair Corralation between Banking Fund and Dodge Cox
Assuming the 90 days horizon Banking Fund Class is expected to generate 1.79 times more return on investment than Dodge Cox. However, Banking Fund is 1.79 times more volatile than Dodge Cox Stock. It trades about 0.28 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.4 per unit of risk. If you would invest 7,503 in Banking Fund Class on November 4, 2024 and sell it today you would earn a total of 489.00 from holding Banking Fund Class or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Banking Fund Class vs. Dodge Cox Stock
Performance |
| Timeline |
| Banking Fund Class |
| Dodge Cox Stock |
Banking Fund and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Banking Fund and Dodge Cox
The main advantage of trading using opposite Banking Fund and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Banking Fund 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.| Banking Fund vs. Thrivent Natural Resources | Banking Fund vs. Fidelity Advisor Energy | Banking Fund vs. Franklin Natural Resources | Banking Fund vs. Hennessy Bp Energy |
| Dodge Cox vs. Chartwell Short Duration | Dodge Cox vs. One Choice Portfolio | Dodge Cox vs. Needham Aggressive Growth | Dodge Cox vs. The Hartford High |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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