Correlation Between Frequency Electronics and Knowles Cor
Can any of the company-specific risk be diversified away by investing in both Frequency Electronics 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 Frequency Electronics and Knowles Cor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frequency Electronics and Knowles Cor, you can compare the effects of market volatilities on Frequency Electronics 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 Frequency Electronics with a short position of Knowles Cor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frequency Electronics and Knowles Cor.
Diversification Opportunities for Frequency Electronics and Knowles Cor
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Frequency and Knowles is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Frequency Electronics and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor and Frequency Electronics 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 Frequency Electronics 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 Frequency Electronics i.e., Frequency Electronics and Knowles Cor go up and down completely randomly.
Pair Corralation between Frequency Electronics and Knowles Cor
Given the investment horizon of 90 days Frequency Electronics is expected to under-perform the Knowles Cor. In addition to that, Frequency Electronics is 1.98 times more volatile than Knowles Cor. It trades about -0.14 of its total potential returns per unit of risk. Knowles Cor is currently generating about 0.19 per unit of volatility. If you would invest 1,976 in Knowles Cor on October 24, 2024 and sell it today you would earn a total of 84.00 from holding Knowles Cor or generate 4.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frequency Electronics vs. Knowles Cor
Performance |
| Timeline |
| Frequency Electronics |
| Knowles Cor |
Frequency Electronics and Knowles Cor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frequency Electronics and Knowles Cor
The main advantage of trading using opposite Frequency Electronics and Knowles Cor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frequency Electronics 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.| Frequency Electronics vs. BK Technologies | Frequency Electronics vs. Actelis Networks | Frequency Electronics vs. Lantronix | Frequency Electronics vs. KVH Industries |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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