Correlation Between Bny Mellon and Dodge Cox

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

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

Diversification Opportunities for Bny Mellon and Dodge Cox

0.94

Correlation Coefficient

Bny Mellon  Dodge Cox

Almost no diversification

The 3 months correlation between Bny and Dodge is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Bny Mellon Income and Dodge Cox Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dodge Cox Stock and Bny Mellon 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 Bny Mellon Income 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 Cox Stock has no effect on the direction of Bny Mellon i.e., Bny Mellon and Dodge Cox go up and down completely randomly.

Pair Corralation between Bny Mellon and Dodge Cox

Assuming the 90 days horizon Bny Mellon is expected to generate 1.01 times less return on investment than Dodge Cox. But when comparing it to its historical volatility, Bny Mellon Income is 1.0 times less risky than Dodge Cox. It trades about 0.28 of its potential returns per unit of risk. Dodge Cox Stock is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  27,361  in Dodge Cox Stock on September 1, 2024 and sell it today you would earn a total of  1,444  from holding Dodge Cox Stock or generate 5.28% return on investment over 90 days.

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

Bny Mellon Income  vs.  Dodge Cox Stock

Bny Mellon Income

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bny Mellon Income are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Bny Mellon may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Dodge Cox Stock

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Cox Stock are ranked lower than 11 (%) 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 December 2024.

Pair Trading with Bny Mellon and Dodge Cox

The main advantage of trading using opposite Bny Mellon and Dodge Cox positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bny Mellon 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 Bny Mellon Income and Dodge Cox 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.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.