Correlation Between Dodge Cox and American Mutual
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and American Mutual 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 American Mutual 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 American Mutual Fund, you can compare the effects of market volatilities on Dodge Cox and American Mutual 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 American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and American Mutual.
Diversification Opportunities for Dodge Cox and American Mutual
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and American is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Dodge Cox i.e., Dodge Cox and American Mutual go up and down completely randomly.
Pair Corralation between Dodge Cox and American Mutual
Assuming the 90 days horizon Dodge Cox Stock is expected to generate 1.18 times more return on investment than American Mutual. However, Dodge Cox is 1.18 times more volatile than American Mutual Fund. It trades about -0.18 of its potential returns per unit of risk. American Mutual Fund is currently generating about -0.25 per unit of risk. If you would invest 25,700 in Dodge Cox Stock on February 1, 2024 and sell it today you would lose (767.00) from holding Dodge Cox Stock or give up 2.98% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Dodge Cox Stock vs. American Mutual Fund
Performance |
Timeline |
Dodge Cox Stock |
American Mutual |
Dodge Cox and American Mutual Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dodge Cox and American Mutual
The main advantage of trading using opposite Dodge Cox and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.Dodge Cox vs. Amcap Fund Class | Dodge Cox vs. American Balanced Fund | Dodge Cox vs. New Perspective Fund | Dodge Cox vs. New World Fund |
American Mutual vs. International Growth Fund | American Mutual vs. Growth Fund Investor | American Mutual vs. Equity Income Fund | American Mutual vs. Ultra Fund Investor |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. |