Correlation Between Knife River and First Trust
Can any of the company-specific risk be diversified away by investing in both Knife River and First Trust 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 First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and First Trust Dorsey, you can compare the effects of market volatilities on Knife River and First Trust 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 First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and First Trust.
Diversification Opportunities for Knife River and First Trust
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Knife and First is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and First Trust Dorsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust Dorsey 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 First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust Dorsey has no effect on the direction of Knife River i.e., Knife River and First Trust go up and down completely randomly.
Pair Corralation between Knife River and First Trust
Considering the 90-day investment horizon Knife River is expected to generate 1.01 times less return on investment than First Trust. In addition to that, Knife River is 3.57 times more volatile than First Trust Dorsey. It trades about 0.11 of its total potential returns per unit of risk. First Trust Dorsey is currently generating about 0.38 per unit of volatility. If you would invest 3,384 in First Trust Dorsey on September 1, 2024 and sell it today you would earn a total of 264.00 from holding First Trust Dorsey or generate 7.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Knife River vs. First Trust Dorsey
Performance |
| Timeline |
| Knife River |
| First Trust Dorsey |
Knife River and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and First Trust
The main advantage of trading using opposite Knife River and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust'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 |
| First Trust vs. Freedom Day Dividend | First Trust vs. iShares MSCI China | First Trust vs. iShares Dividend and | First Trust vs. SmartETFs Dividend Builder |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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