Correlation Between Knife River and American Funds
Can any of the company-specific risk be diversified away by investing in both Knife River and American Funds 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 Knife River and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and American Funds 2050, you can compare the effects of market volatilities on Knife River and American Funds 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 Knife River with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and American Funds.
Diversification Opportunities for Knife River and American Funds
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knife and American is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and American Funds 2050 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2050 and Knife River 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 Knife River are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2050 has no effect on the direction of Knife River i.e., Knife River and American Funds go up and down completely randomly.
Pair Corralation between Knife River and American Funds
Considering the 90-day investment horizon Knife River is expected to generate 3.08 times more return on investment than American Funds. However, Knife River is 3.08 times more volatile than American Funds 2050. It trades about 0.32 of its potential returns per unit of risk. American Funds 2050 is currently generating about 0.14 per unit of risk. If you would invest 9,651 in Knife River on September 13, 2024 and sell it today you would earn a total of 1,024 from holding Knife River or generate 10.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Knife River vs. American Funds 2050
Performance |
| Timeline |
| Knife River |
| American Funds 2050 |
Knife River and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and American Funds
The main advantage of trading using opposite Knife River and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Knife River vs. Ecolab Inc | Knife River vs. Hudson Technologies | Knife River vs. The Mosaic | Knife River vs. Freedom Bank of |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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