Correlation Between AAP and Knowles Cor
Can any of the company-specific risk be diversified away by investing in both AAP and Knowles Cor 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 AAP and Knowles Cor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AAP Inc and Knowles Cor, you can compare the effects of market volatilities on AAP and Knowles Cor 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 AAP with a short position of Knowles Cor. Check out your portfolio center. Please also check ongoing floating volatility patterns of AAP and Knowles Cor.
Diversification Opportunities for AAP and Knowles Cor
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between AAP and Knowles is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding AAP Inc and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor and AAP 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 AAP Inc are associated (or correlated) with Knowles Cor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles Cor has no effect on the direction of AAP i.e., AAP and Knowles Cor go up and down completely randomly.
Pair Corralation between AAP and Knowles Cor
Given the investment horizon of 90 days AAP Inc is expected to generate 19.63 times more return on investment than Knowles Cor. However, AAP is 19.63 times more volatile than Knowles Cor. It trades about 0.13 of its potential returns per unit of risk. Knowles Cor is currently generating about 0.04 per unit of risk. If you would invest 0.02 in AAP Inc on November 3, 2024 and sell it today you would lose (0.01) from holding AAP Inc or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
AAP Inc vs. Knowles Cor
Performance |
| Timeline |
| AAP Inc |
| Knowles Cor |
AAP and Knowles Cor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AAP and Knowles Cor
The main advantage of trading using opposite AAP and Knowles Cor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AAP position performs unexpectedly, Knowles Cor 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 Knowles Cor will offset losses from the drop in Knowles Cor's long position.The idea behind AAP Inc and Knowles Cor 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.| Knowles Cor vs. Mynaric AG ADR | Knowles Cor vs. Comtech Telecommunications Corp | Knowles Cor vs. Ituran Location and | Knowles Cor vs. Aviat Networks |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |