Correlation Between Dodge Cox and Massmutual Select

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

By analyzing existing cross correlation between Dodge Income Fund and Massmutual Select Total, you can compare the effects of market volatilities on Dodge Cox and Massmutual Select 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 Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Massmutual Select.

Diversification Opportunities for Dodge Cox and Massmutual Select

0.89

Correlation Coefficient

Dodge Cox  Massmutual Select

Very poor diversification

The 3 months correlation between Dodge and Massmutual is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Income Fund and Massmutual Select Total in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Total 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 Income Fund are associated (or correlated) with Massmutual Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Select Total has no effect on the direction of Dodge Cox i.e., Dodge Cox and Massmutual Select go up and down completely randomly.

Pair Corralation between Dodge Cox and Massmutual Select

Assuming the 90 days horizon Dodge Income Fund is expected to generate 0.87 times more return on investment than Massmutual Select. However, Dodge Income Fund is 1.15 times less risky than Massmutual Select. It trades about 0.06 of its potential returns per unit of risk. Massmutual Select Total is currently generating about 0.05 per unit of risk. If you would invest  1,123  in Dodge Income Fund on May 5, 2025 and sell it today you would earn a total of  140.00  from holding Dodge Income Fund or generate 12.47% return on investment over 90 days.

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

Dodge Income Fund  vs.  Massmutual Select Total

Dodge Income

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Income Fund are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Dodge Cox is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Massmutual Select Total

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Massmutual Select Total are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Massmutual Select is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dodge Cox and Massmutual Select

The main advantage of trading using opposite Dodge Cox and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Cox position performs unexpectedly, Massmutual Select 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 Massmutual Select will offset losses from the drop in Massmutual Select's long position.

The idea behind Dodge Income Fund and Massmutual Select Total 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.

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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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..