Correlation Between Dodge Stock and Usa Mutuals

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

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

Diversification Opportunities for Dodge Stock and Usa Mutuals

0.74

Correlation Coefficient

Dodge Stock  Usa Mutuals

Poor diversification

The 3 months correlation between Dodge and Usa is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Stock Fund and Usa Mutuals Navigator in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Usa Mutuals Navigator and Dodge Stock 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 Stock Fund are associated (or correlated) with Usa Mutuals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Usa Mutuals Navigator has no effect on the direction of Dodge Stock i.e., Dodge Stock and Usa Mutuals go up and down completely randomly.

Pair Corralation between Dodge Stock and Usa Mutuals

Assuming the 90 days horizon Dodge Stock Fund is expected to generate 1.66 times more return on investment than Usa Mutuals. However, Dodge Stock is 1.66 times more volatile than Usa Mutuals Navigator. It trades about 0.01 of its potential returns per unit of risk. Usa Mutuals Navigator is currently generating about -0.03 per unit of risk. If you would invest  27,338  in Dodge Stock Fund on September 19, 2024 and sell it today you would earn a total of  100.00  from holding Dodge Stock Fund or generate 0.37% return on investment over 90 days.

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

Dodge Stock Fund  vs.  Usa Mutuals Navigator

Dodge Stock Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dodge Stock Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Dodge Stock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Usa Mutuals Navigator

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Usa Mutuals Navigator has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Usa Mutuals is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dodge Stock and Usa Mutuals

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

The idea behind Dodge Stock Fund and Usa Mutuals Navigator 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.