Correlation Between Sp 500 and Dodge Stock
Can any of the company-specific risk be diversified away by investing in both Sp 500 and Dodge Stock 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 Sp 500 and Dodge Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp 500 Pure and Dodge Stock Fund, you can compare the effects of market volatilities on Sp 500 and Dodge Stock 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 Sp 500 with a short position of Dodge Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp 500 and Dodge Stock.
Diversification Opportunities for Sp 500 and Dodge Stock
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between RYZAX and Dodge is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Sp 500 Pure and Dodge Stock Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Stock Fund and Sp 500 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 Sp 500 Pure are associated (or correlated) with Dodge Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge Stock Fund has no effect on the direction of Sp 500 i.e., Sp 500 and Dodge Stock go up and down completely randomly.
Pair Corralation between Sp 500 and Dodge Stock
Assuming the 90 days horizon Sp 500 is expected to generate 2.46 times less return on investment than Dodge Stock. In addition to that, Sp 500 is 1.12 times more volatile than Dodge Stock Fund. It trades about 0.01 of its total potential returns per unit of risk. Dodge Stock Fund is currently generating about 0.04 per unit of volatility. If you would invest 20,597 in Dodge Stock Fund on January 20, 2024 and sell it today you would earn a total of 4,283 from holding Dodge Stock Fund or generate 20.79% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Sp 500 Pure vs. Dodge Stock Fund
Performance |
Timeline |
Sp 500 Pure |
Dodge Stock Fund |
Sp 500 and Dodge Stock Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sp 500 and Dodge Stock
The main advantage of trading using opposite Sp 500 and Dodge Stock positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp 500 position performs unexpectedly, Dodge Stock 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 Stock will offset losses from the drop in Dodge Stock's long position.Sp 500 vs. Basic Materials Fund | Sp 500 vs. Basic Materials Fund | Sp 500 vs. Banking Fund Class | Sp 500 vs. Basic Materials Fund |
Dodge Stock vs. Dodge International Stock | Dodge Stock vs. Dodge Cox Emerging | Dodge Stock vs. Dodge Balanced Fund | Dodge Stock vs. Dodge Global Stock |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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