Correlation Between Ultrasmall Cap and Dodge Cox

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

By analyzing existing cross correlation between Ultrasmall Cap Profund Ultrasmall Cap and Dodge International Stock, you can compare the effects of market volatilities on Ultrasmall Cap and Dodge Cox 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 Ultrasmall Cap with a short position of Dodge Cox. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultrasmall Cap and Dodge Cox.

Diversification Opportunities for Ultrasmall Cap and Dodge Cox

0.91

Correlation Coefficient

Ultrasmall Cap  Dodge Cox

Almost no diversification

The 3 months correlation between Ultrasmall and Dodge is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ultrasmall Cap Profund Ultrasm and Dodge International Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge International Stock and Ultrasmall Cap 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 Ultrasmall Cap Profund Ultrasmall Cap are associated (or correlated) with Dodge Cox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dodge International Stock has no effect on the direction of Ultrasmall Cap i.e., Ultrasmall Cap and Dodge Cox go up and down completely randomly.

Pair Corralation between Ultrasmall Cap and Dodge Cox

Assuming the 90 days horizon Ultrasmall Cap Profund Ultrasmall Cap is expected to generate 3.62 times more return on investment than Dodge Cox. However, Ultrasmall Cap is 3.62 times more volatile than Dodge International Stock. It trades about 0.11 of its potential returns per unit of risk. Dodge International Stock is currently generating about 0.19 per unit of risk. If you would invest  5,160  in Ultrasmall Cap Profund Ultrasmall Cap on May 5, 2025 and sell it today you would earn a total of  759.00  from holding Ultrasmall Cap Profund Ultrasmall Cap or generate 14.71% return on investment over 90 days.

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

Ultrasmall Cap Profund Ultrasm  vs.  Dodge International Stock

Ultrasmall Cap Profund

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ultrasmall Cap Profund Ultrasmall Cap are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly unsteady forward indicators, Ultrasmall Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Dodge International Stock

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge International Stock are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dodge Cox may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Ultrasmall Cap and Dodge Cox

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

The idea behind Ultrasmall Cap Profund Ultrasmall Cap and Dodge International Stock 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.