Correlation Between Knife River and Brixton Metals
Can any of the company-specific risk be diversified away by investing in both Knife River and Brixton Metals 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 Brixton Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Brixton Metals, you can compare the effects of market volatilities on Knife River and Brixton Metals 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 Brixton Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Brixton Metals.
Diversification Opportunities for Knife River and Brixton Metals
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Knife and Brixton is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Brixton Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brixton Metals 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 Brixton Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brixton Metals has no effect on the direction of Knife River i.e., Knife River and Brixton Metals go up and down completely randomly.
Pair Corralation between Knife River and Brixton Metals
Considering the 90-day investment horizon Knife River is expected to generate 0.93 times more return on investment than Brixton Metals. However, Knife River is 1.08 times less risky than Brixton Metals. It trades about 0.14 of its potential returns per unit of risk. Brixton Metals is currently generating about -0.49 per unit of risk. If you would invest 9,575 in Knife River on August 27, 2024 and sell it today you would earn a total of 831.00 from holding Knife River or generate 8.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. Brixton Metals
Performance |
| Timeline |
| Knife River |
| Brixton Metals |
Knife River and Brixton Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Brixton Metals
The main advantage of trading using opposite Knife River and Brixton Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Brixton Metals 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 Brixton Metals will offset losses from the drop in Brixton Metals' long position.| Knife River vs. Radcom | Knife River vs. Kite Realty Group | Knife River vs. Morgan Stanley | Knife River vs. Stepstone Group |
| Brixton Metals vs. Morningstar Unconstrained Allocation | Brixton Metals vs. High Yield Municipal Fund | Brixton Metals vs. Knife River | Brixton Metals vs. Klckner Co SE |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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