Correlation Between Knife River and Electra Battery
Can any of the company-specific risk be diversified away by investing in both Knife River and Electra Battery 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 Electra Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Electra Battery Materials, you can compare the effects of market volatilities on Knife River and Electra Battery 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 Electra Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Electra Battery.
Diversification Opportunities for Knife River and Electra Battery
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Knife and Electra is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Electra Battery Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electra Battery Materials 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 Electra Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electra Battery Materials has no effect on the direction of Knife River i.e., Knife River and Electra Battery go up and down completely randomly.
Pair Corralation between Knife River and Electra Battery
Considering the 90-day investment horizon Knife River is expected to generate 0.94 times more return on investment than Electra Battery. However, Knife River is 1.07 times less risky than Electra Battery. It trades about 0.18 of its potential returns per unit of risk. Electra Battery Materials is currently generating about -0.13 per unit of risk. If you would invest 9,150 in Knife River on August 24, 2024 and sell it today you would earn a total of 1,115 from holding Knife River or generate 12.19% 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. Electra Battery Materials
Performance |
| Timeline |
| Knife River |
| Electra Battery Materials |
Knife River and Electra Battery Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Electra Battery
The main advantage of trading using opposite Knife River and Electra Battery positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Electra Battery 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 Electra Battery will offset losses from the drop in Electra Battery's long position.| Knife River vs. MGIC Investment Corp | Knife River vs. Western Asset Investment | Knife River vs. Guangdong Investment Limited | Knife River vs. Vera Bradley |
| Electra Battery vs. Morningstar Unconstrained Allocation | Electra Battery vs. Knife River | Electra Battery vs. SEI Investments | Electra Battery vs. Goosehead Insurance |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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