Correlation Between Knight Therapeutics and Element Fleet
Can any of the company-specific risk be diversified away by investing in both Knight Therapeutics and Element Fleet 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 Knight Therapeutics and Element Fleet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knight Therapeutics and Element Fleet Management, you can compare the effects of market volatilities on Knight Therapeutics and Element Fleet 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 Knight Therapeutics with a short position of Element Fleet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Therapeutics and Element Fleet.
Diversification Opportunities for Knight Therapeutics and Element Fleet
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Knight and Element is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Knight Therapeutics and Element Fleet Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Element Fleet Management and Knight Therapeutics 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 Knight Therapeutics are associated (or correlated) with Element Fleet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Element Fleet Management has no effect on the direction of Knight Therapeutics i.e., Knight Therapeutics and Element Fleet go up and down completely randomly.
Pair Corralation between Knight Therapeutics and Element Fleet
Assuming the 90 days trading horizon Knight Therapeutics is expected to under-perform the Element Fleet. In addition to that, Knight Therapeutics is 1.7 times more volatile than Element Fleet Management. It trades about -0.12 of its total potential returns per unit of risk. Element Fleet Management is currently generating about 0.1 per unit of volatility. If you would invest 2,813 in Element Fleet Management on August 25, 2024 and sell it today you would earn a total of 148.00 from holding Element Fleet Management or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knight Therapeutics vs. Element Fleet Management
Performance |
| Timeline |
| Knight Therapeutics |
| Element Fleet Management |
Knight Therapeutics and Element Fleet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knight Therapeutics and Element Fleet
The main advantage of trading using opposite Knight Therapeutics and Element Fleet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knight Therapeutics position performs unexpectedly, Element Fleet 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 Element Fleet will offset losses from the drop in Element Fleet's long position.| Knight Therapeutics vs. Stella Jones | Knight Therapeutics vs. Richelieu Hardware | Knight Therapeutics vs. Element Fleet Management | Knight Therapeutics vs. ECN Capital Corp |
| Element Fleet vs. ECN Capital Corp | Element Fleet vs. Martinrea International | Element Fleet vs. CCL Industries | Element Fleet vs. FirstService 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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