Correlation Between Dodge International and Health Care
Can any of the company-specific risk be diversified away by investing in both Dodge International and Health Care 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 International and Health Care into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge International Stock and Health Care Ultrasector, you can compare the effects of market volatilities on Dodge International and Health Care 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 International with a short position of Health Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge International and Health Care.
Diversification Opportunities for Dodge International and Health Care
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and Health is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and Health Care Ultrasector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Ultrasector and Dodge International 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 International Stock are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Ultrasector has no effect on the direction of Dodge International i.e., Dodge International and Health Care go up and down completely randomly.
Pair Corralation between Dodge International and Health Care
Assuming the 90 days horizon Dodge International Stock is expected to generate 0.74 times more return on investment than Health Care. However, Dodge International Stock is 1.34 times less risky than Health Care. It trades about 0.04 of its potential returns per unit of risk. Health Care Ultrasector is currently generating about -0.03 per unit of risk. If you would invest 5,103 in Dodge International Stock on September 14, 2024 and sell it today you would earn a total of 202.00 from holding Dodge International Stock or generate 3.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dodge International Stock vs. Health Care Ultrasector
Performance |
| Timeline |
| Dodge International Stock |
| Health Care Ultrasector |
Dodge International and Health Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge International and Health Care
The main advantage of trading using opposite Dodge International and Health Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge International position performs unexpectedly, Health Care 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 Health Care will offset losses from the drop in Health Care's long position.| Dodge International vs. Dodge Stock Fund | Dodge International vs. Dodge Income Fund | Dodge International vs. Dodge Balanced Fund | Dodge International vs. The Fairholme Fund |
| Health Care vs. Pace Large Growth | Health Care vs. Alternative Asset Allocation | Health Care vs. Enhanced Large Pany | Health Care vs. T Rowe Price |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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