Correlation Between Knife River and Capital Income
Can any of the company-specific risk be diversified away by investing in both Knife River and Capital Income 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 Capital Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Capital Income Builder, you can compare the effects of market volatilities on Knife River and Capital Income 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 Capital Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Capital Income.
Diversification Opportunities for Knife River and Capital Income
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Knife and Capital is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Capital Income Builder in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capital Income Builder 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 Capital Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capital Income Builder has no effect on the direction of Knife River i.e., Knife River and Capital Income go up and down completely randomly.
Pair Corralation between Knife River and Capital Income
Considering the 90-day investment horizon Knife River is expected to generate 4.27 times more return on investment than Capital Income. However, Knife River is 4.27 times more volatile than Capital Income Builder. It trades about 0.11 of its potential returns per unit of risk. Capital Income Builder is currently generating about 0.16 per unit of risk. If you would invest 5,896 in Knife River on September 1, 2024 and sell it today you would earn a total of 4,454 from holding Knife River or generate 75.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.63% |
| Values | Daily Returns |
Knife River vs. Capital Income Builder
Performance |
| Timeline |
| Knife River |
| Capital Income Builder |
Knife River and Capital Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Capital Income
The main advantage of trading using opposite Knife River and Capital Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Capital Income 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 Capital Income will offset losses from the drop in Capital Income's long position.| Knife River vs. Park Hotels Resorts | Knife River vs. The Wendys Co | Knife River vs. Dave Busters Entertainment | Knife River vs. Playa Hotels Resorts |
| Capital Income vs. Income Fund Of | Capital Income vs. New World Fund | Capital Income vs. American Mutual Fund | Capital Income 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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