Correlation Between Dodge Income and Oakmark Bond

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

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

Diversification Opportunities for Dodge Income and Oakmark Bond

1.0

Correlation Coefficient

Dodge Income  Oakmark Bond

No risk reduction

The 3 months correlation between Dodge and Oakmark is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Income Fund and Oakmark Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Bond and Dodge Income 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 Income Fund are associated (or correlated) with Oakmark Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Bond has no effect on the direction of Dodge Income i.e., Dodge Income and Oakmark Bond go up and down completely randomly.

Pair Corralation between Dodge Income and Oakmark Bond

Assuming the 90 days horizon Dodge Income Fund is expected to generate 1.13 times more return on investment than Oakmark Bond. However, Dodge Income is 1.13 times more volatile than Oakmark Bond. It trades about 0.23 of its potential returns per unit of risk. Oakmark Bond is currently generating about 0.23 per unit of risk. If you would invest  1,256  in Dodge Income Fund on September 13, 2024 and sell it today you would earn a total of  17.00  from holding Dodge Income Fund or generate 1.35% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

Dodge Income Fund  vs.  Oakmark Bond

Dodge Income

Risk-Adjusted Performance

0 of 100

Very Weak

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

Oakmark Bond

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oakmark Bond has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Oakmark Bond 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 Income and Oakmark Bond

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

The idea behind Dodge Income Fund and Oakmark Bond 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.