Correlation Between Ionet and Knife River
Can any of the company-specific risk be diversified away by investing in both Ionet 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 Ionet and Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ionet and Knife River, you can compare the effects of market volatilities on Ionet 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 Ionet with a short position of Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ionet and Knife River.
Diversification Opportunities for Ionet and Knife River
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ionet and Knife is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding ionet and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River and Ionet 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 ionet 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 Ionet i.e., Ionet and Knife River go up and down completely randomly.
Pair Corralation between Ionet and Knife River
Assuming the 90 days horizon ionet is expected to generate 2.94 times more return on investment than Knife River. However, Ionet is 2.94 times more volatile than Knife River. It trades about 0.15 of its potential returns per unit of risk. Knife River is currently generating about 0.06 per unit of risk. If you would invest 183.00 in ionet on October 26, 2024 and sell it today you would earn a total of 138.00 from holding ionet or generate 75.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 93.65% |
| Values | Daily Returns |
ionet vs. Knife River
Performance |
| Timeline |
| ionet |
| Knife River |
Ionet and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ionet and Knife River
The main advantage of trading using opposite Ionet and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ionet 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 ionet 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. Getty Copper | Knife River vs. Spectrum Brands Holdings | Knife River vs. Black Mammoth Metals | Knife River vs. Hillman Solutions 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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