Correlation Between Knife River and Barloworld
Can any of the company-specific risk be diversified away by investing in both Knife River and Barloworld 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 Barloworld into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Barloworld Ltd ADR, you can compare the effects of market volatilities on Knife River and Barloworld 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 Barloworld. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Barloworld.
Diversification Opportunities for Knife River and Barloworld
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Knife and Barloworld is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Barloworld Ltd ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barloworld ADR 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 Barloworld. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barloworld ADR has no effect on the direction of Knife River i.e., Knife River and Barloworld go up and down completely randomly.
Pair Corralation between Knife River and Barloworld
Considering the 90-day investment horizon Knife River is expected to generate 3.34 times less return on investment than Barloworld. But when comparing it to its historical volatility, Knife River is 3.31 times less risky than Barloworld. It trades about 0.16 of its potential returns per unit of risk. Barloworld Ltd ADR is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 403.00 in Barloworld Ltd ADR on September 13, 2024 and sell it today you would earn a total of 222.00 from holding Barloworld Ltd ADR or generate 55.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. Barloworld Ltd ADR
Performance |
| Timeline |
| Knife River |
| Barloworld ADR |
Knife River and Barloworld Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Barloworld
The main advantage of trading using opposite Knife River and Barloworld positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Barloworld 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 Barloworld will offset losses from the drop in Barloworld's long position.| Knife River vs. Ecolab Inc | Knife River vs. Hudson Technologies | Knife River vs. The Mosaic | Knife River vs. Freedom Bank of |
| Barloworld vs. Hertz Global Holdings | Barloworld vs. United Rentals | Barloworld vs. Ryder System | Barloworld vs. Herc Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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