Correlation Between Knife River and Capella Minerals
Can any of the company-specific risk be diversified away by investing in both Knife River and Capella Minerals 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 Capella Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Capella Minerals Limited, you can compare the effects of market volatilities on Knife River and Capella Minerals 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 Capella Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Capella Minerals.
Diversification Opportunities for Knife River and Capella Minerals
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Knife and Capella is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Capella Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capella Minerals 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 Capella Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capella Minerals has no effect on the direction of Knife River i.e., Knife River and Capella Minerals go up and down completely randomly.
Pair Corralation between Knife River and Capella Minerals
Considering the 90-day investment horizon Knife River is expected to generate 0.46 times more return on investment than Capella Minerals. However, Knife River is 2.16 times less risky than Capella Minerals. It trades about 0.15 of its potential returns per unit of risk. Capella Minerals Limited is currently generating about -0.17 per unit of risk. If you would invest 8,895 in Knife River on August 25, 2024 and sell it today you would earn a total of 1,370 from holding Knife River or generate 15.4% 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. Capella Minerals Limited
Performance |
| Timeline |
| Knife River |
| Capella Minerals |
Knife River and Capella Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Capella Minerals
The main advantage of trading using opposite Knife River and Capella Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Capella Minerals 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 Capella Minerals will offset losses from the drop in Capella Minerals' long position.| Knife River vs. Chester Mining | Knife River vs. Aldel Financial II | Knife River vs. NetSol Technologies | Knife River vs. ServiceNow |
| Capella Minerals vs. Morningstar Unconstrained Allocation | Capella Minerals vs. High Yield Municipal Fund | Capella Minerals vs. Knife River | Capella Minerals 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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