Correlation Between Dodge Cox and Federated Mdt

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

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

Diversification Opportunities for Dodge Cox and Federated Mdt

0.98

Correlation Coefficient

Dodge Cox  Federated Mdt

Almost no diversification

The 3 months correlation between Dodge and Federated is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and Federated Mdt Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mdt Large 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 Cox Stock are associated (or correlated) with Federated Mdt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mdt Large has no effect on the direction of Dodge Cox i.e., Dodge Cox and Federated Mdt go up and down completely randomly.

Pair Corralation between Dodge Cox and Federated Mdt

Assuming the 90 days horizon Dodge Cox is expected to generate 1.56 times less return on investment than Federated Mdt. In addition to that, Dodge Cox is 1.07 times more volatile than Federated Mdt Large. It trades about 0.14 of its total potential returns per unit of risk. Federated Mdt Large is currently generating about 0.24 per unit of volatility. If you would invest  3,397  in Federated Mdt Large on August 31, 2024 and sell it today you would earn a total of  355.00  from holding Federated Mdt Large or generate 10.45% return on investment over 90 days.

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

Dodge Cox Stock  vs.  Federated Mdt Large

Dodge Cox Stock

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Cox Stock are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dodge Cox may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Federated Mdt Large

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Federated Mdt Large are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Federated Mdt may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Dodge Cox and Federated Mdt

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

The idea behind Dodge Cox Stock and Federated Mdt Large 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.