Correlation Between Value Fund and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Value 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 Value 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 Value Fund Investor and Dodge Cox Stock, you can compare the effects of market volatilities on Value 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 Value Fund with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Value Fund and Dodge Cox.
Diversification Opportunities for Value Fund and Dodge Cox
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Value and Dodge is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Value Fund Investor 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 Value 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 Value Fund Investor 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 Value Fund i.e., Value Fund and Dodge Cox go up and down completely randomly.
Pair Corralation between Value Fund and Dodge Cox
Assuming the 90 days horizon Value Fund is expected to generate 1.58 times less return on investment than Dodge Cox. In addition to that, Value Fund is 1.02 times more volatile than Dodge Cox Stock. It trades about 0.1 of its total potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.16 per unit of volatility. If you would invest 21,395 in Dodge Cox Stock on September 1, 2024 and sell it today you would earn a total of 7,340 from holding Dodge Cox Stock or generate 34.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Value Fund Investor vs. Dodge Cox Stock
Performance |
| Timeline |
| Value Fund Investor |
| Dodge Cox Stock |
Value Fund and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Value Fund and Dodge Cox
The main advantage of trading using opposite Value Fund and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Value 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.| Value Fund vs. International Growth Fund | Value Fund vs. Growth Fund Investor | Value Fund vs. Equity Income Fund | Value Fund vs. Ultra Fund Investor |
| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Cox Emerging | Dodge Cox vs. Dodge Balanced 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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