Correlation Between Knife River and CompX International
Can any of the company-specific risk be diversified away by investing in both Knife River and CompX International 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 CompX International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and CompX International, you can compare the effects of market volatilities on Knife River and CompX International 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 CompX International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and CompX International.
Diversification Opportunities for Knife River and CompX International
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Knife and CompX is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and CompX International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CompX International 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 CompX International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CompX International has no effect on the direction of Knife River i.e., Knife River and CompX International go up and down completely randomly.
Pair Corralation between Knife River and CompX International
Considering the 90-day investment horizon Knife River is expected to generate 0.56 times more return on investment than CompX International. However, Knife River is 1.79 times less risky than CompX International. It trades about 0.14 of its potential returns per unit of risk. CompX International is currently generating about 0.04 per unit of risk. If you would invest 3,551 in Knife River on August 28, 2024 and sell it today you would earn a total of 6,855 from holding Knife River or generate 193.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 76.16% |
| Values | Daily Returns |
Knife River vs. CompX International
Performance |
| Timeline |
| Knife River |
| CompX International |
Knife River and CompX International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and CompX International
The main advantage of trading using opposite Knife River and CompX International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, CompX International 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 CompX International will offset losses from the drop in CompX International's long position.| Knife River vs. Radcom | Knife River vs. Kite Realty Group | Knife River vs. Morgan Stanley | Knife River vs. Stepstone Group |
| CompX International vs. Park Electrochemical | CompX International vs. Innovative Solutions and | CompX International vs. Curtiss Wright | CompX International vs. National Presto Industries |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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