Correlation Between Dodge Cox and Dodge Global

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

By analyzing existing cross correlation between Dodge Cox Global and Dodge Global Stock, you can compare the effects of market volatilities on Dodge Cox and Dodge Global 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 Dodge Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Dodge Global.

Diversification Opportunities for Dodge Cox and Dodge Global

0.42

Correlation Coefficient

Dodge Cox  Dodge Global

Very weak diversification

The 3 months correlation between Dodge and Dodge is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Global and Dodge Global Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Global Stock 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 Global are associated (or correlated) with Dodge Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Global Stock has no effect on the direction of Dodge Cox i.e., Dodge Cox and Dodge Global go up and down completely randomly.

Pair Corralation between Dodge Cox and Dodge Global

Assuming the 90 days horizon Dodge Cox Global is expected to under-perform the Dodge Global. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge Cox Global is 2.04 times less risky than Dodge Global. The mutual fund trades about -0.2 of its potential returns per unit of risk. The Dodge Global Stock is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  1,648  in Dodge Global Stock on September 17, 2024 and sell it today you would lose (23.00) from holding Dodge Global Stock or give up 1.4% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Dodge Cox Global  vs.  Dodge Global Stock

Dodge Cox Global

Risk-Adjusted Performance

0 of 100

Very Weak

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

Dodge Global Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dodge Global Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Dodge Global 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 Dodge Global

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

The idea behind Dodge Cox Global and Dodge Global Stock 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.