Correlation Between Dodge Cox and The Hartford

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

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

Diversification Opportunities for Dodge Cox and The Hartford

0.93

Correlation Coefficient

Dodge Cox  The Hartford

Almost no diversification

The 3 months correlation between Dodge and The is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Stock Fund and The Hartford Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Dividend 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 Stock Fund are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Dividend has no effect on the direction of Dodge Cox i.e., Dodge Cox and The Hartford go up and down completely randomly.

Pair Corralation between Dodge Cox and The Hartford

Assuming the 90 days horizon Dodge Cox is expected to generate 33.13 times less return on investment than The Hartford. In addition to that, Dodge Cox is 1.7 times more volatile than The Hartford Dividend. It trades about 0.0 of its total potential returns per unit of risk. The Hartford Dividend is currently generating about 0.04 per unit of volatility. If you would invest  3,379  in The Hartford Dividend on October 24, 2024 and sell it today you would earn a total of  68.00  from holding The Hartford Dividend or generate 2.01% return on investment over 90 days.

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

Dodge Stock Fund  vs.  The Hartford Dividend

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 Cox is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hartford Dividend

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Dividend are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, The Hartford 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 The Hartford

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

The idea behind Dodge Stock Fund and The Hartford Dividend 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.