Correlation Between Knife River and Impala Platinum
Can any of the company-specific risk be diversified away by investing in both Knife River and Impala Platinum 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 Impala Platinum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Impala Platinum Holdings, you can compare the effects of market volatilities on Knife River and Impala Platinum 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 Impala Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Impala Platinum.
Diversification Opportunities for Knife River and Impala Platinum
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Knife and Impala is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings 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 Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Knife River i.e., Knife River and Impala Platinum go up and down completely randomly.
Pair Corralation between Knife River and Impala Platinum
Considering the 90-day investment horizon Knife River is expected to generate 0.56 times more return on investment than Impala Platinum. However, Knife River is 1.79 times less risky than Impala Platinum. It trades about 0.2 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about 0.11 per unit of risk. If you would invest 7,762 in Knife River on August 29, 2024 and sell it today you would earn a total of 2,513 from holding Knife River or generate 32.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. Impala Platinum Holdings
Performance |
| Timeline |
| Knife River |
| Impala Platinum Holdings |
Knife River and Impala Platinum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Impala Platinum
The main advantage of trading using opposite Knife River and Impala Platinum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Impala Platinum 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 Impala Platinum will offset losses from the drop in Impala Platinum'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 |
| Impala Platinum vs. Anglo American Platinum | Impala Platinum vs. Sibanye Gold Ltd | Impala Platinum vs. Anglo American PLC | Impala Platinum vs. Fortescue Metals Group |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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