Correlation Between Astonriver Road and Dodge Stock

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

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

Diversification Opportunities for Astonriver Road and Dodge Stock

-0.14

Correlation Coefficient

Astonriver Road  Dodge Stock

Good diversification

The 3 months correlation between Astonriver and Dodge is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Astonriver Road Independent and Dodge Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Stock Fund and Astonriver Road 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 Astonriver Road Independent are associated (or correlated) with Dodge Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Stock Fund has no effect on the direction of Astonriver Road i.e., Astonriver Road and Dodge Stock go up and down completely randomly.

Pair Corralation between Astonriver Road and Dodge Stock

Assuming the 90 days horizon Astonriver Road is expected to generate 1.74 times less return on investment than Dodge Stock. In addition to that, Astonriver Road is 1.16 times more volatile than Dodge Stock Fund. It trades about 0.05 of its total potential returns per unit of risk. Dodge Stock Fund is currently generating about 0.11 per unit of volatility. If you would invest  20,276  in Dodge Stock Fund on September 21, 2024 and sell it today you would earn a total of  5,491  from holding Dodge Stock Fund or generate 27.08% return on investment over 90 days.

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

Astonriver Road Independent  vs.  Dodge Stock Fund

Astonriver Road Inde

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Astonriver Road and Dodge Stock

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

The idea behind Astonriver Road Independent and Dodge Stock Fund 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.