Correlation Between Dodge Cox and Mirova International

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

By analyzing existing cross correlation between Dodge International Stock and Mirova International Sustainable, you can compare the effects of market volatilities on Dodge Cox and Mirova International 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 Mirova International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Mirova International.

Diversification Opportunities for Dodge Cox and Mirova International

0.97

Correlation Coefficient

Dodge Cox  Mirova International

Almost no diversification

The 3 months correlation between Dodge and Mirova is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Mirova International Sustainab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mirova International 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 International Stock are associated (or correlated) with Mirova International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mirova International has no effect on the direction of Dodge Cox i.e., Dodge Cox and Mirova International go up and down completely randomly.

Pair Corralation between Dodge Cox and Mirova International

Assuming the 90 days horizon Dodge International Stock is expected to generate 0.89 times more return on investment than Mirova International. However, Dodge International Stock is 1.12 times less risky than Mirova International. It trades about 0.26 of its potential returns per unit of risk. Mirova International Sustainable is currently generating about 0.14 per unit of risk. If you would invest  5,001  in Dodge International Stock on December 22, 2024 and sell it today you would earn a total of  690.00  from holding Dodge International Stock or generate 13.8% return on investment over 90 days.

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

Dodge International Stock  vs.  Mirova International Sustainab

Dodge International Stock

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge International Stock are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dodge Cox showed solid returns over the last few months and may actually be approaching a breakup point.

Mirova International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mirova International Sustainable are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mirova International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dodge Cox and Mirova International

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

The idea behind Dodge International Stock and Mirova International Sustainable 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.