Correlation Between Oppenheimer Rochester and Dodge Cox

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

By analyzing existing cross correlation between Oppenheimer Rochester Ltd and Dodge Cox Stock, you can compare the effects of market volatilities on Oppenheimer Rochester and Dodge Cox 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 Oppenheimer Rochester with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oppenheimer Rochester and Dodge Cox.

Diversification Opportunities for Oppenheimer Rochester and Dodge Cox

0.14

Correlation Coefficient

Oppenheimer Rochester  Dodge Cox

Average diversification

The 3 months correlation between Oppenheimer and Dodge is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Oppenheimer Rochester Ltd and Dodge Cox Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox Stock and Oppenheimer Rochester 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 Oppenheimer Rochester Ltd are associated (or correlated) with Dodge Cox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Cox Stock has no effect on the direction of Oppenheimer Rochester i.e., Oppenheimer Rochester and Dodge Cox go up and down completely randomly.

Pair Corralation between Oppenheimer Rochester and Dodge Cox

Assuming the 90 days horizon Oppenheimer Rochester is expected to generate 10.07 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, Oppenheimer Rochester Ltd is 4.84 times less risky than Dodge Cox. It trades about 0.03 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  25,883  in Dodge Cox Stock on December 23, 2024 and sell it today you would earn a total of  824.00  from holding Dodge Cox Stock or generate 3.18% return on investment over 90 days.

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

Oppenheimer Rochester Ltd  vs.  Dodge Cox Stock

Oppenheimer Rochester

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Oppenheimer Rochester Ltd are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Oppenheimer Rochester is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dodge Cox Stock

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Cox Stock are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Oppenheimer Rochester and Dodge Cox

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

The idea behind Oppenheimer Rochester Ltd and Dodge Cox Stock 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.