Correlation Between Element Fleet and Knight Therapeutics
Can any of the company-specific risk be diversified away by investing in both Element Fleet and Knight Therapeutics 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 Element Fleet and Knight Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Element Fleet Management and Knight Therapeutics, you can compare the effects of market volatilities on Element Fleet and Knight Therapeutics 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 Element Fleet with a short position of Knight Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Element Fleet and Knight Therapeutics.
Diversification Opportunities for Element Fleet and Knight Therapeutics
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Element and Knight is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Element Fleet Management and Knight Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Therapeutics and Element Fleet 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 Element Fleet Management are associated (or correlated) with Knight Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Therapeutics has no effect on the direction of Element Fleet i.e., Element Fleet and Knight Therapeutics go up and down completely randomly.
Pair Corralation between Element Fleet and Knight Therapeutics
Assuming the 90 days trading horizon Element Fleet Management is expected to under-perform the Knight Therapeutics. But the stock apears to be less risky and, when comparing its historical volatility, Element Fleet Management is 1.23 times less risky than Knight Therapeutics. The stock trades about -0.09 of its potential returns per unit of risk. The Knight Therapeutics is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 534.00 in Knight Therapeutics on November 3, 2024 and sell it today you would earn a total of 20.00 from holding Knight Therapeutics or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Element Fleet Management vs. Knight Therapeutics
Performance |
| Timeline |
| Element Fleet Management |
| Knight Therapeutics |
Element Fleet and Knight Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Element Fleet and Knight Therapeutics
The main advantage of trading using opposite Element Fleet and Knight Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Element Fleet position performs unexpectedly, Knight Therapeutics 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 Knight Therapeutics will offset losses from the drop in Knight Therapeutics' long position.| Element Fleet vs. ECN Capital Corp | Element Fleet vs. Martinrea International | Element Fleet vs. CCL Industries | Element Fleet vs. FirstService Corp |
| Knight Therapeutics vs. Stella Jones | Knight Therapeutics vs. Richelieu Hardware | Knight Therapeutics vs. Element Fleet Management | Knight Therapeutics vs. ECN Capital Corp |
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.
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