Correlation Between Dodge Cox and IShares Dividend

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

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

Diversification Opportunities for Dodge Cox and IShares Dividend

0.74

Correlation Coefficient

Dodge Cox  IShares Dividend

Poor diversification

The 3 months correlation between Dodge and IShares is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Global Stock and iShares Dividend and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares 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 Global Stock are associated (or correlated) with IShares Dividend. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Dividend has no effect on the direction of Dodge Cox i.e., Dodge Cox and IShares Dividend go up and down completely randomly.

Pair Corralation between Dodge Cox and IShares Dividend

Assuming the 90 days horizon Dodge Global Stock is expected to generate 1.04 times more return on investment than IShares Dividend. However, Dodge Cox is 1.04 times more volatile than iShares Dividend and. It trades about 0.14 of its potential returns per unit of risk. iShares Dividend and is currently generating about 0.08 per unit of risk. If you would invest  1,369  in Dodge Global Stock on December 29, 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 Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dodge Global Stock  vs.  iShares Dividend and

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.

iShares Dividend

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Dividend and are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, IShares Dividend is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dodge Cox and IShares Dividend

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

The idea behind Dodge Global Stock and iShares Dividend and 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.