Correlation Between Knife River and Ecolab
Can any of the company-specific risk be diversified away by investing in both Knife River and Ecolab 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 Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Ecolab Inc, you can compare the effects of market volatilities on Knife River and Ecolab 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 Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Ecolab.
Diversification Opportunities for Knife River and Ecolab
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Knife and Ecolab is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Knife River i.e., Knife River and Ecolab go up and down completely randomly.
Pair Corralation between Knife River and Ecolab
Considering the 90-day investment horizon Knife River is expected to generate 2.14 times more return on investment than Ecolab. However, Knife River is 2.14 times more volatile than Ecolab Inc. It trades about 0.27 of its potential returns per unit of risk. Ecolab Inc is currently generating about 0.02 per unit of risk. If you would invest 9,651 in Knife River on September 13, 2024 and sell it today you would earn a total of 865.00 from holding Knife River or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. Ecolab Inc
Performance |
| Timeline |
| Knife River |
| Ecolab Inc |
Knife River and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Ecolab
The main advantage of trading using opposite Knife River and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's long position.| Knife River vs. Sphere Entertainment Co | Knife River vs. Weibo Corp | Knife River vs. Radcom | Knife River vs. Plexus Corp |
| Ecolab vs. LyondellBasell Industries NV | Ecolab vs. International Flavors Fragrances | Ecolab vs. Cabot | Ecolab vs. Westlake Chemical |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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