Correlation Between Hillman Solutions and Knife River
Can any of the company-specific risk be diversified away by investing in both Hillman Solutions 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 Hillman Solutions and Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hillman Solutions Corp and Knife River, you can compare the effects of market volatilities on Hillman Solutions 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 Hillman Solutions with a short position of Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hillman Solutions and Knife River.
Diversification Opportunities for Hillman Solutions and Knife River
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hillman and Knife is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hillman Solutions Corp and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River and Hillman Solutions 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 Hillman Solutions Corp 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 Hillman Solutions i.e., Hillman Solutions and Knife River go up and down completely randomly.
Pair Corralation between Hillman Solutions and Knife River
Given the investment horizon of 90 days Hillman Solutions Corp is expected to generate 0.7 times more return on investment than Knife River. However, Hillman Solutions Corp is 1.43 times less risky than Knife River. It trades about 0.11 of its potential returns per unit of risk. Knife River is currently generating about 0.04 per unit of risk. If you would invest 965.00 in Hillman Solutions Corp on November 5, 2024 and sell it today you would earn a total of 35.00 from holding Hillman Solutions Corp or generate 3.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hillman Solutions Corp vs. Knife River
Performance |
| Timeline |
| Hillman Solutions Corp |
| Knife River |
Hillman Solutions and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hillman Solutions and Knife River
The main advantage of trading using opposite Hillman Solutions and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hillman Solutions 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.| Hillman Solutions vs. Kennametal | Hillman Solutions vs. AB SKF | Hillman Solutions vs. Eastern Co | Hillman Solutions vs. Timken Company |
| Knife River vs. RH | Knife River vs. Treasury Wine Estates | Knife River vs. Oatly Group AB | Knife River vs. Naked Wines plc |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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