Correlation Between Dodge Cox and Dreyfus Strategic

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

Diversification Opportunities for Dodge Cox and Dreyfus Strategic

0.33

Correlation Coefficient

Dodge Cox  Dreyfus Strategic

Weak diversification

The 3 months correlation between Dodge and Dreyfus is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Dreyfus Strategic Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreyfus Strategic 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 Dreyfus Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreyfus Strategic has no effect on the direction of Dodge Cox i.e., Dodge Cox and Dreyfus Strategic go up and down completely randomly.

Pair Corralation between Dodge Cox and Dreyfus Strategic

Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the Dreyfus Strategic. In addition to that, Dodge Cox is 2.06 times more volatile than Dreyfus Strategic Municipal. It trades about -0.06 of its total potential returns per unit of risk. Dreyfus Strategic Municipal is currently generating about -0.1 per unit of volatility. If you would invest  690.00  in Dreyfus Strategic Municipal on September 26, 2024 and sell it today you would lose (25.00) from holding Dreyfus Strategic Municipal or give up 3.62% of portfolio value over 90 days.

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

Dodge Cox Stock  vs.  Dreyfus Strategic Municipal

Dodge Cox Stock

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dodge Cox Stock has generated negative risk-adjusted returns adding no value to fund investors. 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.

Dreyfus Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dreyfus Strategic Municipal has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong primary indicators, Dreyfus Strategic 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 Cox and Dreyfus Strategic

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

The idea behind Dodge Cox Stock and Dreyfus Strategic Municipal 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.