Correlation Between Franklin Mutual and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Franklin Mutual 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 Franklin Mutual and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franklin Mutual Beacon and Dodge Cox Stock, you can compare the effects of market volatilities on Franklin Mutual 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 Franklin Mutual with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franklin Mutual and Dodge Cox.
Diversification Opportunities for Franklin Mutual and Dodge Cox
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Franklin and Dodge is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Franklin Mutual Beacon 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 Franklin Mutual 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 Franklin Mutual Beacon 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 Franklin Mutual i.e., Franklin Mutual and Dodge Cox go up and down completely randomly.
Pair Corralation between Franklin Mutual and Dodge Cox
Assuming the 90 days horizon Franklin Mutual is expected to generate 1.3 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, Franklin Mutual Beacon is 1.45 times less risky than Dodge Cox. It trades about 0.19 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 27,710 in Dodge Cox Stock on August 29, 2024 and sell it today you would earn a total of 946.00 from holding Dodge Cox Stock or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Franklin Mutual Beacon vs. Dodge Cox Stock
Performance |
| Timeline |
| Franklin Mutual Beacon |
| Dodge Cox Stock |
Franklin Mutual and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Franklin Mutual and Dodge Cox
The main advantage of trading using opposite Franklin Mutual and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franklin Mutual 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.| Franklin Mutual vs. Dodge Cox Stock | Franklin Mutual vs. Alternative Asset Allocation | Franklin Mutual vs. Hartford Moderate Allocation | Franklin Mutual vs. Enhanced Large Pany |
| 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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