Correlation Between Knife River and Chemours
Can any of the company-specific risk be diversified away by investing in both Knife River and Chemours 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 Chemours into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Chemours Co, you can compare the effects of market volatilities on Knife River and Chemours 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 Chemours. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Chemours.
Diversification Opportunities for Knife River and Chemours
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knife and Chemours is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Chemours Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chemours 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 Chemours. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chemours has no effect on the direction of Knife River i.e., Knife River and Chemours go up and down completely randomly.
Pair Corralation between Knife River and Chemours
Considering the 90-day investment horizon Knife River is expected to generate 0.63 times more return on investment than Chemours. However, Knife River is 1.59 times less risky than Chemours. It trades about 0.13 of its potential returns per unit of risk. Chemours Co is currently generating about -0.03 per unit of risk. If you would invest 4,287 in Knife River on September 12, 2024 and sell it today you would earn a total of 5,994 from holding Knife River or generate 139.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. Chemours Co
Performance |
| Timeline |
| Knife River |
| Chemours |
Knife River and Chemours Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Chemours
The main advantage of trading using opposite Knife River and Chemours positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Chemours 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 Chemours will offset losses from the drop in Chemours' long position.| Knife River vs. NL Industries | Knife River vs. Park Electrochemical | Knife River vs. Ecolab Inc | Knife River vs. Air Products and |
| Chemours vs. Griffon | Chemours vs. Merck Company | Chemours vs. Brinker International | Chemours vs. Alcoa Corp |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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