Correlation Between Adams Diversified and Dodge Cox

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

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

Diversification Opportunities for Adams Diversified and Dodge Cox

0.02

Correlation Coefficient

Adams Diversified  Dodge Cox

Significant diversification

The 3 months correlation between Adams and Dodge is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Adams Diversified Equity and Dodge Global Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Global Stock and Adams Diversified 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 Adams Diversified Equity 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 Global Stock has no effect on the direction of Adams Diversified i.e., Adams Diversified and Dodge Cox go up and down completely randomly.

Pair Corralation between Adams Diversified and Dodge Cox

Considering the 90-day investment horizon Adams Diversified Equity is expected to under-perform the Dodge Cox. In addition to that, Adams Diversified is 1.26 times more volatile than Dodge Global Stock. It trades about -0.05 of its total potential returns per unit of risk. Dodge Global Stock is currently generating about 0.17 per unit of volatility. If you would invest  1,369  in Dodge Global Stock on December 28, 2024 and sell it today you would earn a total of  112.00  from holding Dodge Global Stock or generate 8.18% return on investment over 90 days.

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

Adams Diversified Equity  vs.  Dodge Global Stock

Adams Diversified Equity

Risk-Adjusted Performance

Very Weak

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

Dodge Global Stock

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Global Stock are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dodge Cox may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Adams Diversified and Dodge Cox

The main advantage of trading using opposite Adams Diversified and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Adams Diversified 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 Adams Diversified Equity and Dodge Global Stock 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.