Correlation Between Dodge Cox and Natixis Oakmark

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

Diversification Opportunities for Dodge Cox and Natixis Oakmark

0.98

Correlation Coefficient

Dodge Cox  Natixis Oakmark

Almost no diversification

The 3 months correlation between Dodge and Natixis is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Natixis Oakmark in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natixis Oakmark 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 Natixis Oakmark. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natixis Oakmark has no effect on the direction of Dodge Cox i.e., Dodge Cox and Natixis Oakmark go up and down completely randomly.

Pair Corralation between Dodge Cox and Natixis Oakmark

Assuming the 90 days horizon Dodge Cox is expected to generate 1.66 times less return on investment than Natixis Oakmark. But when comparing it to its historical volatility, Dodge Cox Stock is 1.18 times less risky than Natixis Oakmark. It trades about 0.13 of its potential returns per unit of risk. Natixis Oakmark is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,227  in Natixis Oakmark on September 12, 2024 and sell it today you would earn a total of  313.00  from holding Natixis Oakmark or generate 9.7% return on investment over 90 days.

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

Dodge Cox Stock  vs.  Natixis Oakmark

Dodge Cox Stock

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Cox Stock are ranked lower than 10 (%) 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.

Natixis Oakmark

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Natixis Oakmark are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Natixis Oakmark may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dodge Cox and Natixis Oakmark

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

The idea behind Dodge Cox Stock and Natixis Oakmark 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.