Correlation Between Dodge Cox and Knife River

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

By analyzing existing cross correlation between Dodge Global Stock and Knife River, you can compare the effects of market volatilities on Dodge Cox and Knife River 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 Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dodge Cox and Knife River.

Diversification Opportunities for Dodge Cox and Knife River

-0.42

Correlation Coefficient

Dodge Cox  Knife River

Very good diversification

The 3 months correlation between Dodge and Knife is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Dodge Global Stock and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Global Stock are associated (or correlated) with Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Dodge Cox i.e., Dodge Cox and Knife River go up and down completely randomly.

Pair Corralation between Dodge Cox and Knife River

Assuming the 90 days horizon Dodge Global Stock is expected to generate 0.27 times more return on investment than Knife River. However, Dodge Global Stock is 3.68 times less risky than Knife River. It trades about 0.17 of its potential returns per unit of risk. Knife River is currently generating about -0.06 per unit of risk. If you would invest  1,369  in Dodge Global Stock on December 28, 2024 and sell it today you would earn a total of  112.00  from holding Dodge Global Stock or generate 8.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Dodge Global Stock  vs.  Knife River

Dodge Global Stock

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dodge Global Stock are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Dodge Cox may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Knife River

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knife River has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Dodge Cox and Knife River

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

The idea behind Dodge Global Stock and Knife River 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.