Correlation Between SPACE and Knife River
Can any of the company-specific risk be diversified away by investing in both SPACE 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 SPACE and Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPACE and Knife River, you can compare the effects of market volatilities on SPACE 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 SPACE with a short position of Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPACE and Knife River.
Diversification Opportunities for SPACE and Knife River
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between SPACE and Knife is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding SPACE and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River and SPACE 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 SPACE 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 SPACE i.e., SPACE and Knife River go up and down completely randomly.
Pair Corralation between SPACE and Knife River
Assuming the 90 days horizon SPACE is expected to under-perform the Knife River. In addition to that, SPACE is 1.96 times more volatile than Knife River. It trades about -0.21 of its total potential returns per unit of risk. Knife River is currently generating about 0.06 per unit of volatility. If you would invest 10,102 in Knife River on November 4, 2024 and sell it today you would earn a total of 256.00 from holding Knife River or generate 2.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 90.91% |
| Values | Daily Returns |
SPACE vs. Knife River
Performance |
| Timeline |
| SPACE |
| Knife River |
SPACE and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPACE and Knife River
The main advantage of trading using opposite SPACE and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPACE 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.The idea behind SPACE and Knife River pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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