Correlation Between Knife River and Ionet
Can any of the company-specific risk be diversified away by investing in both Knife River and Ionet 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 Ionet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and ionet, you can compare the effects of market volatilities on Knife River and Ionet 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 Ionet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Ionet.
Diversification Opportunities for Knife River and Ionet
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Knife and Ionet is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and ionet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ionet 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 Ionet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ionet has no effect on the direction of Knife River i.e., Knife River and Ionet go up and down completely randomly.
Pair Corralation between Knife River and Ionet
Considering the 90-day investment horizon Knife River is expected to generate 0.24 times more return on investment than Ionet. However, Knife River is 4.17 times less risky than Ionet. It trades about 0.04 of its potential returns per unit of risk. ionet is currently generating about -0.06 per unit of risk. If you would invest 10,232 in Knife River on November 5, 2024 and sell it today you would earn a total of 126.00 from holding Knife River or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
Knife River vs. ionet
Performance |
| Timeline |
| Knife River |
| ionet |
Knife River and Ionet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Ionet
The main advantage of trading using opposite Knife River and Ionet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Ionet 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 Ionet will offset losses from the drop in Ionet's long position.| Knife River vs. RH | Knife River vs. Treasury Wine Estates | Knife River vs. Oatly Group AB | Knife River vs. Naked Wines plc |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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