Correlation Between Dodge Cox and The Hartford
Can any of the company-specific risk be diversified away by investing in both Dodge Cox and The Hartford 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 Cox and The Hartford into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Cox Stock and The Hartford Small, you can compare the effects of market volatilities on Dodge Cox and The Hartford 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 Cox with a short position of The Hartford. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and The Hartford.
Diversification Opportunities for Dodge Cox and The Hartford
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dodge and The is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and The Hartford Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Small and Dodge Cox 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 Cox Stock are associated (or correlated) with The Hartford. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Small has no effect on the direction of Dodge Cox i.e., Dodge Cox and The Hartford go up and down completely randomly.
Pair Corralation between Dodge Cox and The Hartford
Assuming the 90 days horizon Dodge Cox is expected to generate 1.8 times less return on investment than The Hartford. But when comparing it to its historical volatility, Dodge Cox Stock is 1.59 times less risky than The Hartford. It trades about 0.28 of its potential returns per unit of risk. The Hartford Small is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,987 in The Hartford Small on September 1, 2024 and sell it today you would earn a total of 201.00 from holding The Hartford Small or generate 10.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dodge Cox Stock vs. The Hartford Small
Performance |
| Timeline |
| Dodge Cox Stock |
| Hartford Small |
Dodge Cox and The Hartford Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge Cox and The Hartford
The main advantage of trading using opposite Dodge Cox and The Hartford positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, The Hartford 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 The Hartford will offset losses from the drop in The Hartford's long position.| Dodge Cox vs. Dodge Stock Fund | Dodge Cox vs. Dodge International Stock | Dodge Cox vs. Dodge Cox Emerging | Dodge Cox vs. Dodge Balanced Fund |
| The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth | The Hartford vs. The Hartford Growth |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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