Correlation Between Dodge Stock and Federated Mortgage

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Can any of the company-specific risk be diversified away by investing in both Dodge Stock and Federated Mortgage 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 Stock and Federated Mortgage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dodge Stock Fund and Federated Mortgage Fund, you can compare the effects of market volatilities on Dodge Stock and Federated Mortgage 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 Stock with a short position of Federated Mortgage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Stock and Federated Mortgage.

Diversification Opportunities for Dodge Stock and Federated Mortgage

0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Dodge and Federated is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding DODGE STOCK FUND and FEDERATED MORTGAGE FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Mortgage Fund and Dodge Stock 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 Stock Fund are associated (or correlated) with Federated Mortgage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Mortgage Fund has no effect on the direction of Dodge Stock i.e., Dodge Stock and Federated Mortgage go up and down completely randomly.

Pair Corralation between Dodge Stock and Federated Mortgage

If you would invest  24,421  in Dodge Stock Fund on December 29, 2023 and sell it today you would earn a total of  1,322  from holding Dodge Stock Fund or generate 5.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy4.55%
ValuesDaily Returns

DODGE STOCK FUND  vs.  FEDERATED MORTGAGE FUND

 Performance 
       Timeline  
Dodge Stock Fund 

Risk-Adjusted Performance

14 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Stock Fund are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Dodge Stock may actually be approaching a critical reversion point that can send shares even higher in April 2024.
Federated Mortgage Fund 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days Federated Mortgage Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Federated Mortgage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dodge Stock and Federated Mortgage Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dodge Stock and Federated Mortgage

The main advantage of trading using opposite Dodge Stock and Federated Mortgage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dodge Stock position performs unexpectedly, Federated Mortgage 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 Federated Mortgage will offset losses from the drop in Federated Mortgage's long position.
The idea behind Dodge Stock Fund and Federated Mortgage Fund 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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