Correlation Between Dodge Cox and Dunham Large
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Dunham Large 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 Dunham Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge International Stock and Dunham Large Cap, you can compare the effects of market volatilities on Dodge Cox and Dunham Large 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 Dunham Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Dunham Large.
Diversification Opportunities for Dodge Cox and Dunham Large
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Dunham is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Dunham Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunham Large Cap 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 International Stock are associated (or correlated) with Dunham Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunham Large Cap has no effect on the direction of Dodge Cox i.e., Dodge Cox and Dunham Large go up and down completely randomly.
Pair Corralation between Dodge Cox and Dunham Large
Assuming the 90 days horizon Dodge International Stock is expected to under-perform the Dunham Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge International Stock is 1.34 times less risky than Dunham Large. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Dunham Large Cap is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 1,924 in Dunham Large Cap on October 21, 2024 and sell it today you would lose (94.00) from holding Dunham Large Cap or give up 4.89% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Dodge International Stock vs. Dunham Large Cap
Performance |
Timeline |
Dodge International Stock |
Dunham Large Cap |
Dodge Cox and Dunham Large Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dodge Cox and Dunham Large
The main advantage of trading using opposite Dodge Cox and Dunham Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Dunham Large 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 Dunham Large will offset losses from the drop in Dunham Large's long position.Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge Income Fund | Dodge Cox vs. Dodge Balanced Fund | Dodge Cox vs. The Fairholme Fund |
Dunham Large vs. Dunham Dynamic Macro | Dunham Large vs. Dunham Appreciation Income | Dunham Large vs. Dunham Porategovernment Bond | Dunham Large vs. Dunham Small Cap |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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