Correlation Between Oakmark Select and Dodge Cox

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

By analyzing existing cross correlation between Oakmark Select Fund and Dodge Cox International, you can compare the effects of market volatilities on Oakmark Select and Dodge Cox 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 Oakmark Select with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oakmark Select and Dodge Cox.

Diversification Opportunities for Oakmark Select and Dodge Cox

0.78

Correlation Coefficient

Oakmark Select  Dodge Cox

Poor diversification

The 3 months correlation between Oakmark and Dodge is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Oakmark Select Fund and Dodge Cox International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox International and Oakmark Select 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 Oakmark Select Fund are associated (or correlated) with Dodge Cox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Cox International has no effect on the direction of Oakmark Select i.e., Oakmark Select and Dodge Cox go up and down completely randomly.

Pair Corralation between Oakmark Select and Dodge Cox

Assuming the 90 days horizon Oakmark Select Fund is expected to generate 1.24 times more return on investment than Dodge Cox. However, Oakmark Select is 1.24 times more volatile than Dodge Cox International. It trades about 0.09 of its potential returns per unit of risk. Dodge Cox International is currently generating about 0.06 per unit of risk. If you would invest  5,417  in Oakmark Select Fund on November 20, 2024 and sell it today you would earn a total of  2,976  from holding Oakmark Select Fund or generate 54.94% return on investment over 90 days.

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

Oakmark Select Fund  vs.  Dodge Cox International

Oakmark Select

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Oakmark Select Fund are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Oakmark Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dodge Cox International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Cox International are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dodge Cox may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Oakmark Select and Dodge Cox

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

The idea behind Oakmark Select Fund and Dodge Cox International 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 CEOs Directory module to screen CEOs from public companies around the world.