Correlation Between Dodge Cox and Maingate Mlp

Can any of the company-specific risk be diversified away by investing in both Dodge Cox and Maingate Mlp 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 Maingate Mlp 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 Maingate Mlp Fund, you can compare the effects of market volatilities on Dodge Cox and Maingate Mlp 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 Maingate Mlp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Maingate Mlp.

Diversification Opportunities for Dodge Cox and Maingate Mlp

0.22

Correlation Coefficient

Dodge Cox  Maingate Mlp

Modest diversification

The 3 months correlation between Dodge and Maingate is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Stock Fund and Maingate Mlp Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maingate Mlp 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 Maingate Mlp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maingate Mlp has no effect on the direction of Dodge Cox i.e., Dodge Cox and Maingate Mlp go up and down completely randomly.

Pair Corralation between Dodge Cox and Maingate Mlp

Assuming the 90 days horizon Dodge Stock Fund is expected to under-perform the Maingate Mlp. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge Stock Fund is 1.11 times less risky than Maingate Mlp. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Maingate Mlp Fund is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  898.00  in Maingate Mlp Fund on December 5, 2024 and sell it today you would lose (15.00) from holding Maingate Mlp Fund or give up 1.67% of portfolio value over 90 days.

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

Dodge Stock Fund  vs.  Maingate Mlp Fund

Dodge Stock Fund

Risk-Adjusted Performance

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.

Maingate Mlp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Maingate Mlp Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Maingate Mlp 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 Maingate Mlp

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

The idea behind Dodge Stock Fund and Maingate Mlp 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.

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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.