Correlation Between Wells Fargo and Dodge Cox
Can any of the company-specific risk be diversified away by investing in both Wells Fargo 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 Wells Fargo and Dodge Cox into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wells Fargo Funds and Dodge Cox International, you can compare the effects of market volatilities on Wells Fargo 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 Wells Fargo with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wells Fargo and Dodge Cox.
Diversification Opportunities for Wells Fargo and Dodge Cox
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wells and Dodge is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Wells Fargo Funds and Dodge Cox International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox International and Wells Fargo 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 Wells Fargo Funds 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 International has no effect on the direction of Wells Fargo i.e., Wells Fargo and Dodge Cox go up and down completely randomly.
Pair Corralation between Wells Fargo and Dodge Cox
Assuming the 90 days horizon Wells Fargo is expected to generate 2.86 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, Wells Fargo Funds is 1.95 times less risky than Dodge Cox. It trades about 0.03 of its potential returns per unit of risk. Dodge Cox International is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,586 in Dodge Cox International on September 4, 2024 and sell it today you would earn a total of 698.00 from holding Dodge Cox International or generate 15.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.68% |
| Values | Daily Returns |
Wells Fargo Funds vs. Dodge Cox International
Performance |
| Timeline |
| Wells Fargo Funds |
| Dodge Cox International |
Wells Fargo and Dodge Cox Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wells Fargo and Dodge Cox
The main advantage of trading using opposite Wells Fargo and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wells Fargo 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.| Wells Fargo vs. Vanguard Total Stock | Wells Fargo vs. Vanguard 500 Index | Wells Fargo vs. Vanguard Total Stock | Wells Fargo vs. Vanguard Total Stock |
| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. Dodge Global Stock | Dodge Cox vs. Dodge Income 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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