Correlation Between Knight Therapeutics and Stella Jones
Can any of the company-specific risk be diversified away by investing in both Knight Therapeutics and Stella Jones 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 Stella Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knight Therapeutics and Stella Jones, you can compare the effects of market volatilities on Knight Therapeutics and Stella Jones 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 Stella Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knight Therapeutics and Stella Jones.
Diversification Opportunities for Knight Therapeutics and Stella Jones
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knight and Stella is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Knight Therapeutics and Stella Jones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stella Jones 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 Stella Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stella Jones has no effect on the direction of Knight Therapeutics i.e., Knight Therapeutics and Stella Jones go up and down completely randomly.
Pair Corralation between Knight Therapeutics and Stella Jones
Assuming the 90 days trading horizon Knight Therapeutics is expected to generate 3.01 times less return on investment than Stella Jones. But when comparing it to its historical volatility, Knight Therapeutics is 1.23 times less risky than Stella Jones. It trades about 0.02 of its potential returns per unit of risk. Stella Jones is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,724 in Stella Jones on November 1, 2024 and sell it today you would earn a total of 2,422 from holding Stella Jones or generate 51.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knight Therapeutics vs. Stella Jones
Performance |
| Timeline |
| Knight Therapeutics |
| Stella Jones |
Knight Therapeutics and Stella Jones Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knight Therapeutics and Stella Jones
The main advantage of trading using opposite Knight Therapeutics and Stella Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knight Therapeutics position performs unexpectedly, Stella Jones 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 Stella Jones will offset losses from the drop in Stella Jones' long position.| Knight Therapeutics vs. Stella Jones | Knight Therapeutics vs. Richelieu Hardware | Knight Therapeutics vs. Element Fleet Management | Knight Therapeutics vs. ECN Capital Corp |
| Stella Jones vs. Richelieu Hardware | Stella Jones vs. CCL Industries | Stella Jones vs. Stantec | Stella Jones vs. Gildan Activewear |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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