Correlation Between Us Global and Dodge Cox

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

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

Diversification Opportunities for Us Global and Dodge Cox

0.79

Correlation Coefficient

Us Global  Dodge Cox

Poor diversification

The 3 months correlation between USGLX and Dodge is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Us Global Leaders and Dodge Global Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Global Stock and Us Global 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 Us Global Leaders 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 Global Stock has no effect on the direction of Us Global i.e., Us Global and Dodge Cox go up and down completely randomly.

Pair Corralation between Us Global and Dodge Cox

Assuming the 90 days horizon Us Global Leaders is expected to under-perform the Dodge Cox. In addition to that, Us Global is 1.04 times more volatile than Dodge Global Stock. It trades about -0.14 of its total potential returns per unit of risk. Dodge Global Stock is currently generating about -0.08 per unit of volatility. If you would invest  1,622  in Dodge Global Stock on November 28, 2024 and sell it today you would lose (152.00) from holding Dodge Global Stock or give up 9.37% of portfolio value over 90 days.

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

Us Global Leaders  vs.  Dodge Global Stock

Us Global Leaders

Risk-Adjusted Performance

Very Weak

Over the last 90 days Us Global Leaders has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's essential indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Dodge Global Stock

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dodge Global Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Us Global and Dodge Cox

The main advantage of trading using opposite Us Global and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Us Global 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 Us Global Leaders and Dodge Global 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.

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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.