Correlation Between Knife River and Koppers Holdings
Can any of the company-specific risk be diversified away by investing in both Knife River and Koppers Holdings 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 Koppers Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Koppers Holdings, you can compare the effects of market volatilities on Knife River and Koppers Holdings 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 Koppers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Koppers Holdings.
Diversification Opportunities for Knife River and Koppers Holdings
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Knife and Koppers is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Koppers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koppers 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 Koppers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koppers Holdings has no effect on the direction of Knife River i.e., Knife River and Koppers Holdings go up and down completely randomly.
Pair Corralation between Knife River and Koppers Holdings
Considering the 90-day investment horizon Knife River is expected to generate 0.98 times more return on investment than Koppers Holdings. However, Knife River is 1.02 times less risky than Koppers Holdings. It trades about 0.16 of its potential returns per unit of risk. Koppers Holdings is currently generating about 0.06 per unit of risk. If you would invest 8,907 in Knife River on August 28, 2024 and sell it today you would earn a total of 1,499 from holding Knife River or generate 16.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. Koppers Holdings
Performance |
| Timeline |
| Knife River |
| Koppers Holdings |
Knife River and Koppers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Koppers Holdings
The main advantage of trading using opposite Knife River and Koppers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Koppers Holdings 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 Koppers Holdings will offset losses from the drop in Koppers Holdings' long position.| Knife River vs. Radcom | Knife River vs. Kite Realty Group | Knife River vs. Morgan Stanley | Knife River vs. Stepstone Group |
| Koppers Holdings vs. H B Fuller | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Oil Dri |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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