Correlation Between Dodge Cox and Near Term

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Near Term 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 Near Term into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Cox Stock and Near Term Tax Free, you can compare the effects of market volatilities on Dodge Cox and Near Term 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 Near Term. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Near Term.

Diversification Opportunities for Dodge Cox and Near Term

DodgeNearDiversified AwayDodgeNearDiversified Away100%
0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Dodge and Near is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Near Term Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Near Term Tax 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 Stock are associated (or correlated) with Near Term. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Near Term Tax has no effect on the direction of Dodge Cox i.e., Dodge Cox and Near Term go up and down completely randomly.

Pair Corralation between Dodge Cox and Near Term

Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the Near Term. In addition to that, Dodge Cox is 8.43 times more volatile than Near Term Tax Free. It trades about -0.07 of its total potential returns per unit of risk. Near Term Tax Free is currently generating about -0.06 per unit of volatility. If you would invest  210.00  in Near Term Tax Free on September 24, 2024 and sell it today you would lose (1.00) from holding Near Term Tax Free or give up 0.48% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Dodge Cox Stock  vs.  Near Term Tax Free

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -1012345
JavaScript chart by amCharts 3.21.15DOXGX NEARX
       Timeline  
Dodge Cox Stock 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Dodge Cox Stock has generated negative risk-adjusted returns adding no value to fund investors. 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec255260265270275280285
Near Term Tax 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Near Term Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Near Term is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec2.092.0922.0942.0962.0982.1

Dodge Cox and Near Term Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.86-1.41-0.96-0.51-0.07710.290.741.191.642.09 5101520
JavaScript chart by amCharts 3.21.15DOXGX NEARX
       Returns  

Pair Trading with Dodge Cox and Near Term

The main advantage of trading using opposite Dodge Cox and Near Term positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Near Term 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 Near Term will offset losses from the drop in Near Term's long position.
The idea behind Dodge Cox Stock and Near Term Tax Free 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.
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.

Other Complementary Tools

Technical Analysis
Check basic technical indicators and analysis based on most latest market data
Equity Search
Search for actively traded equities including funds and ETFs from over 30 global markets
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Price Transformation
Use Price Transformation models to analyze the depth of different equity instruments across global markets
AI Portfolio Architect
Use AI to generate optimal portfolios and find profitable investment opportunities