Correlation Between Dodge Cox and International Strategic

Can any of the company-specific risk be diversified away by investing in both Dodge Cox and International Strategic 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 International Strategic 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 International Strategic Equities, you can compare the effects of market volatilities on Dodge Cox and International Strategic 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 International Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and International Strategic.

Diversification Opportunities for Dodge Cox and International Strategic

0.91

Correlation Coefficient

Dodge Cox  International Strategic

Almost no diversification

The 3 months correlation between Dodge and International is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Emerging and International Strategic Equiti in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Strategic 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 International Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Strategic has no effect on the direction of Dodge Cox i.e., Dodge Cox and International Strategic go up and down completely randomly.

Pair Corralation between Dodge Cox and International Strategic

Assuming the 90 days horizon Dodge Cox is expected to generate 1.5 times less return on investment than International Strategic. But when comparing it to its historical volatility, Dodge Cox Emerging is 1.02 times less risky than International Strategic. It trades about 0.04 of its potential returns per unit of risk. International Strategic Equities is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,091  in International Strategic Equities on October 4, 2024 and sell it today you would earn a total of  179.00  from holding International Strategic Equities or generate 16.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.7%
Values	Daily Returns

Dodge Cox Emerging  vs.  International Strategic Equiti

Dodge Cox Emerging

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dodge Cox Emerging has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

International Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Strategic Equities has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Dodge Cox and International Strategic

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

The idea behind Dodge Cox Emerging and International Strategic Equities 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.