Correlation Between Dodge Stock and Hot Mamas

Can any of the company-specific risk be diversified away by investing in both Dodge Stock and Hot Mamas 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 Hot Mamas 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 Hot Mamas Foods, you can compare the effects of market volatilities on Dodge Stock and Hot Mamas 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 Hot Mamas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Stock and Hot Mamas.

Diversification Opportunities for Dodge Stock and Hot Mamas

0.0

Correlation Coefficient

Dodge Stock  Hot Mamas

Pay attention - limited upside

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

Pair Corralation between Dodge Stock and Hot Mamas

If you would invest  19,399  in Dodge Stock Fund on January 25, 2024 and sell it today you would earn a total of  5,865  from holding Dodge Stock Fund or generate 30.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Dodge Stock Fund  vs.  Hot Mamas Foods

Dodge Stock Fund

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Stock Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Dodge Stock is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hot Mamas Foods

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hot Mamas Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Hot Mamas is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Dodge Stock and Hot Mamas

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

The idea behind Dodge Stock Fund and Hot Mamas Foods 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.