Correlation Between East Africa and Knife River
Can any of the company-specific risk be diversified away by investing in both East Africa 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 East Africa and Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between East Africa Metals and Knife River, you can compare the effects of market volatilities on East Africa 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 East Africa with a short position of Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of East Africa and Knife River.
Diversification Opportunities for East Africa and Knife River
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between East and Knife is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding East Africa Metals and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River and East Africa 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 East Africa Metals 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 East Africa i.e., East Africa and Knife River go up and down completely randomly.
Pair Corralation between East Africa and Knife River
Assuming the 90 days horizon East Africa Metals is expected to generate 7.8 times more return on investment than Knife River. However, East Africa is 7.8 times more volatile than Knife River. It trades about 0.07 of its potential returns per unit of risk. Knife River is currently generating about 0.13 per unit of risk. If you would invest 6.26 in East Africa Metals on August 24, 2024 and sell it today you would earn a total of 4.74 from holding East Africa Metals or generate 75.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
East Africa Metals vs. Knife River
Performance |
| Timeline |
| East Africa Metals |
| Knife River |
East Africa and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with East Africa and Knife River
The main advantage of trading using opposite East Africa and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if East Africa 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.| East Africa vs. Syrah Resources Limited | East Africa vs. Nouveau Monde Graphite | East Africa vs. Small Cap Core | East Africa vs. Morningstar Unconstrained Allocation |
| Knife River vs. Cemex SAB de | Knife River vs. Boise Cascad Llc | Knife River vs. CRH PLC ADR | Knife River vs. Eagle Materials |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
Other Complementary Tools
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format |