Correlation Between Dodge Cox and Quantitative

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

Diversification Opportunities for Dodge Cox and Quantitative

0.57

Correlation Coefficient

Dodge Cox  Quantitative

Very weak diversification

The 3 months correlation between Dodge and Quantitative is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Quantitative U S in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantitative U S 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 Quantitative. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantitative U S has no effect on the direction of Dodge Cox i.e., Dodge Cox and Quantitative go up and down completely randomly.

Pair Corralation between Dodge Cox and Quantitative

Assuming the 90 days horizon Dodge Cox Stock is expected to generate 0.54 times more return on investment than Quantitative. However, Dodge Cox Stock is 1.84 times less risky than Quantitative. It trades about 0.08 of its potential returns per unit of risk. Quantitative U S is currently generating about -0.06 per unit of risk. If you would invest  25,928  in Dodge Cox Stock on November 20, 2024 and sell it today you would earn a total of  1,536  from holding Dodge Cox Stock or generate 5.92% return on investment over 90 days.

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

Dodge Cox Stock  vs.  Quantitative U S

Dodge Cox Stock

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Cox Stock are ranked lower than 4 (%) 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.

Quantitative U S

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quantitative U S 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 Quantitative

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

The idea behind Dodge Cox Stock and Quantitative U S 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.