Correlation Between Dodge International and International Business
Can any of the company-specific risk be diversified away by investing in both Dodge International and International Business 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 International Business 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 International Business Machines, you can compare the effects of market volatilities on Dodge International and International Business 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 International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge International and International Business.
Diversification Opportunities for Dodge International and International Business
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dodge and International is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dodge International Stock and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business 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 International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of Dodge International i.e., Dodge International and International Business go up and down completely randomly.
Pair Corralation between Dodge International and International Business
Assuming the 90 days horizon Dodge International Stock is expected to generate 0.62 times more return on investment than International Business. However, Dodge International Stock is 1.62 times less risky than International Business. It trades about -0.24 of its potential returns per unit of risk. International Business Machines is currently generating about -0.34 per unit of risk. If you would invest 5,033 in Dodge International Stock on January 20, 2024 and sell it today you would lose (149.00) from holding Dodge International Stock or give up 2.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dodge International Stock vs. International Business Machine
Performance |
| Timeline |
| Dodge International Stock |
| International Business |
Dodge International and International Business Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dodge International and International Business
The main advantage of trading using opposite Dodge International and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge International position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' 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 |
| International Business vs. Information Services Group | International Business vs. Home Bancorp | International Business vs. CRA International | International Business vs. Aquagold International |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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