Correlation Between Dodge Cox and GreenSky

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

Diversification Opportunities for Dodge Cox and GreenSky

0.4
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Dodge and GreenSky is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Cox Stock and GreenSky Inc in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on GreenSky 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 Cox Stock are associated (or correlated) with GreenSky. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GreenSky has no effect on the direction of Dodge Cox i.e., Dodge Cox and GreenSky go up and down completely randomly.

Pair Corralation between Dodge Cox and GreenSky

Assuming the 90 days horizon Dodge Cox Stock is expected to under-perform the GreenSky. But the mutual fund apears to be less risky and, when comparing its historical volatility, Dodge Cox Stock is 1.53 times less risky than GreenSky. The mutual fund trades about -0.08 of its potential returns per unit of risk. The GreenSky is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,004  in GreenSky on February 18, 2022 and sell it today you would earn a total of  16.00  from holding GreenSky or generate 1.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy50.0%
ValuesDaily Returns

Dodge Cox Stock  vs.  GreenSky Inc

 Performance (%) 
      Timeline 
Dodge Cox Stock 
Dodge Performance
0 of 100
Over the last 90 days Dodge Cox Stock has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Dodge Price Channel

GreenSky 
GreenSky Performance
0 of 100
Over the last 90 days GreenSky has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward-looking signals, GreenSky is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Dodge Cox and GreenSky Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Dodge Cox and GreenSky

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

GreenSky

Pair trading matchups for GreenSky

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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