Correlation Between Knife River and SPACE
Can any of the company-specific risk be diversified away by investing in both Knife River and SPACE 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 SPACE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and SPACE, you can compare the effects of market volatilities on Knife River and SPACE 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 SPACE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and SPACE.
Diversification Opportunities for Knife River and SPACE
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knife and SPACE is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and SPACE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPACE 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 SPACE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPACE has no effect on the direction of Knife River i.e., Knife River and SPACE go up and down completely randomly.
Pair Corralation between Knife River and SPACE
Considering the 90-day investment horizon Knife River is expected to generate 103.35 times less return on investment than SPACE. But when comparing it to its historical volatility, Knife River is 77.6 times less risky than SPACE. It trades about 0.13 of its potential returns per unit of risk. SPACE is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 0.00 in SPACE on August 23, 2024 and sell it today you would earn a total of 45.00 from holding SPACE or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 81.6% |
| Values | Daily Returns |
Knife River vs. SPACE
Performance |
| Timeline |
| Knife River |
| SPACE |
Knife River and SPACE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and SPACE
The main advantage of trading using opposite Knife River and SPACE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, SPACE 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 SPACE will offset losses from the drop in SPACE's long position.| Knife River vs. Cemex SAB de | Knife River vs. Boise Cascad Llc | Knife River vs. CRH PLC ADR | Knife River vs. Eagle Materials |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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