Correlation Between Dodge Cox and World Growth

Can any of the company-specific risk be diversified away by investing in both Dodge Cox and World Growth 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 Dodge Cox and World Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dodge Cox Emerging and World Growth Fund, you can compare the effects of market volatilities on Dodge Cox and World Growth 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 Dodge Cox with a short position of World Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and World Growth.

Diversification Opportunities for Dodge Cox and World Growth

0.0

Correlation Coefficient

Dodge Cox  World Growth

Pay attention - limited upside

The 3 months correlation between Dodge and World is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Emerging and World Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Growth and Dodge Cox 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 Dodge Cox Emerging are associated (or correlated) with World Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Growth has no effect on the direction of Dodge Cox i.e., Dodge Cox and World Growth go up and down completely randomly.

Pair Corralation between Dodge Cox and World Growth

If you would invest  880.00  in Dodge Cox Emerging on August 31, 2024 and sell it today you would earn a total of  23.00  from holding Dodge Cox Emerging or generate 2.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Dodge Cox Emerging  vs.  World Growth Fund

Dodge Cox Emerging

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Cox Emerging are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dodge Cox is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

World Growth

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days World Growth Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, World Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dodge Cox and World Growth

The main advantage of trading using opposite Dodge Cox and World Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, World Growth 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 World Growth will offset losses from the drop in World Growth's long position.

The idea behind Dodge Cox Emerging and World Growth Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.