Correlation Between Knights Of and Global Technology
Can any of the company-specific risk be diversified away by investing in both Knights Of and Global Technology 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 Knights Of and Global Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knights Of Umbus and Global Technology Portfolio, you can compare the effects of market volatilities on Knights Of and Global Technology 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 Knights Of with a short position of Global Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knights Of and Global Technology.
Diversification Opportunities for Knights Of and Global Technology
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Knights and Global is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Knights Of Umbus and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology and Knights Of 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 Knights Of Umbus are associated (or correlated) with Global Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Technology has no effect on the direction of Knights Of i.e., Knights Of and Global Technology go up and down completely randomly.
Pair Corralation between Knights Of and Global Technology
Assuming the 90 days horizon Knights Of Umbus is expected to generate 0.9 times more return on investment than Global Technology. However, Knights Of Umbus is 1.12 times less risky than Global Technology. It trades about 0.11 of its potential returns per unit of risk. Global Technology Portfolio is currently generating about 0.05 per unit of risk. If you would invest 1,299 in Knights Of Umbus on September 3, 2024 and sell it today you would earn a total of 239.00 from holding Knights Of Umbus or generate 18.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knights Of Umbus vs. Global Technology Portfolio
Performance |
| Timeline |
| Knights Of Umbus |
| Global Technology |
Knights Of and Global Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knights Of and Global Technology
The main advantage of trading using opposite Knights Of and Global Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knights Of position performs unexpectedly, Global Technology 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 Global Technology will offset losses from the drop in Global Technology's long position.| Knights Of vs. Global Technology Portfolio | Knights Of vs. Allianzgi Technology Fund | Knights Of vs. Dreyfus Technology Growth | Knights Of vs. Janus Global Technology |
| Global Technology vs. Vanguard Information Technology | Global Technology vs. Technology Portfolio Technology | Global Technology vs. Fidelity Select Semiconductors | Global Technology vs. Software And It |
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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