Correlation Between Collegium Pharmaceutical and Dodge Cox

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

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

Diversification Opportunities for Collegium Pharmaceutical and Dodge Cox

-0.23

Correlation Coefficient

Collegium Pharmaceutical  Dodge Cox

Very good diversification

The 3 months correlation between Collegium and Dodge is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Collegium Pharmaceutical 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 Collegium Pharmaceutical 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 Collegium Pharmaceutical 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 Collegium Pharmaceutical i.e., Collegium Pharmaceutical and Dodge Cox go up and down completely randomly.

Pair Corralation between Collegium Pharmaceutical and Dodge Cox

Given the investment horizon of 90 days Collegium Pharmaceutical is expected to generate 1.13 times less return on investment than Dodge Cox. In addition to that, Collegium Pharmaceutical is 3.33 times more volatile than Dodge Global Stock. It trades about 0.04 of its total potential returns per unit of risk. Dodge Global Stock is currently generating about 0.13 per unit of volatility. If you would invest  1,369  in Dodge Global Stock on December 30, 2024 and sell it today you would earn a total of  90.00  from holding Dodge Global Stock or generate 6.57% return on investment over 90 days.

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

Collegium Pharmaceutical  vs.  Dodge Global Stock

Collegium Pharmaceutical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Collegium Pharmaceutical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent essential indicators, Collegium Pharmaceutical is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Dodge Global Stock

Risk-Adjusted Performance

OK

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

The main advantage of trading using opposite Collegium Pharmaceutical and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Collegium Pharmaceutical 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 Collegium Pharmaceutical 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.