Correlation Between Dodge Cox and Dreyfus Global

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

Diversification Opportunities for Dodge Cox and Dreyfus Global

0.93

Correlation Coefficient

Dodge Cox  Dreyfus Global

Almost no diversification

The 3 months correlation between Dodge and Dreyfus is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Global and Dreyfus Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Global Equity 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 Dreyfus Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Global Equity has no effect on the direction of Dodge Cox i.e., Dodge Cox and Dreyfus Global go up and down completely randomly.

Pair Corralation between Dodge Cox and Dreyfus Global

Assuming the 90 days horizon Dodge Cox is expected to generate 1.28 times less return on investment than Dreyfus Global. In addition to that, Dodge Cox is 1.12 times more volatile than Dreyfus Global Equity. It trades about 0.14 of its total potential returns per unit of risk. Dreyfus Global Equity is currently generating about 0.19 per unit of volatility. If you would invest  1,157  in Dreyfus Global Equity on December 29, 2024 and sell it today you would earn a total of  101.00  from holding Dreyfus Global Equity or generate 8.73% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.39%
Values	Daily Returns

Dodge Cox Global  vs.  Dreyfus Global Equity

Dodge Cox Global

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Cox Global are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dodge Cox may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dreyfus Global Equity

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dreyfus Global Equity are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Dreyfus Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dodge Cox and Dreyfus Global

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

The idea behind Dodge Cox Global and Dreyfus Global Equity 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 Global Correlations module to find global opportunities by holding instruments from different markets.