Correlation Between Victory Incore and Dodge Cox

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

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

Diversification Opportunities for Victory Incore and Dodge Cox

0.91

Correlation Coefficient

Victory Incore  Dodge Cox

Almost no diversification

The 3 months correlation between Victory and Dodge is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Victory Incore Low and Dodge International Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge International Stock and Victory Incore 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 Victory Incore Low 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 International Stock has no effect on the direction of Victory Incore i.e., Victory Incore and Dodge Cox go up and down completely randomly.

Pair Corralation between Victory Incore and Dodge Cox

Assuming the 90 days horizon Victory Incore is expected to generate 7.61 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, Victory Incore Low is 6.88 times less risky than Dodge Cox. It trades about 0.23 of its potential returns per unit of risk. Dodge International Stock is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  5,001  in Dodge International Stock on December 22, 2024 and sell it today you would earn a total of  690.00  from holding Dodge International Stock or generate 13.8% return on investment over 90 days.

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

Victory Incore Low  vs.  Dodge International Stock

Victory Incore Low

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Victory Incore Low are ranked lower than 18 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Victory Incore is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dodge International Stock

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge International Stock are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dodge Cox showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Victory Incore and Dodge Cox

The main advantage of trading using opposite Victory Incore and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Victory Incore 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 Victory Incore Low and Dodge International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.