Correlation Between Knife River and Arras Minerals
Can any of the company-specific risk be diversified away by investing in both Knife River and Arras Minerals 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 Arras Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Arras Minerals Corp, you can compare the effects of market volatilities on Knife River and Arras Minerals 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 Arras Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Arras Minerals.
Diversification Opportunities for Knife River and Arras Minerals
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Knife and Arras is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Arras Minerals Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arras Minerals Corp 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 Arras Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arras Minerals Corp has no effect on the direction of Knife River i.e., Knife River and Arras Minerals go up and down completely randomly.
Pair Corralation between Knife River and Arras Minerals
Considering the 90-day investment horizon Knife River is expected to generate 0.45 times more return on investment than Arras Minerals. However, Knife River is 2.21 times less risky than Arras Minerals. It trades about 0.22 of its potential returns per unit of risk. Arras Minerals Corp is currently generating about -0.01 per unit of risk. If you would invest 7,762 in Knife River on August 29, 2024 and sell it today you would earn a total of 2,696 from holding Knife River or generate 34.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. Arras Minerals Corp
Performance |
| Timeline |
| Knife River |
| Arras Minerals Corp |
Knife River and Arras Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Arras Minerals
The main advantage of trading using opposite Knife River and Arras Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Arras Minerals 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 Arras Minerals will offset losses from the drop in Arras Minerals' long position.| Knife River vs. Cemex SAB de | Knife River vs. Boise Cascad Llc | Knife River vs. CRH PLC ADR | Knife River vs. Eagle Materials |
| Arras Minerals vs. American Sierra Gold | Arras Minerals vs. Gold79 Mines | Arras Minerals vs. Cartier Iron Corp | Arras Minerals vs. Alien Metals |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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