Correlation Between Knife River and BlackRock Carbon
Can any of the company-specific risk be diversified away by investing in both Knife River and BlackRock Carbon 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 BlackRock Carbon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and BlackRock Carbon Transition, you can compare the effects of market volatilities on Knife River and BlackRock Carbon 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 BlackRock Carbon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and BlackRock Carbon.
Diversification Opportunities for Knife River and BlackRock Carbon
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Knife and BlackRock is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and BlackRock Carbon Transition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock Carbon Tra 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 BlackRock Carbon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock Carbon Tra has no effect on the direction of Knife River i.e., Knife River and BlackRock Carbon go up and down completely randomly.
Pair Corralation between Knife River and BlackRock Carbon
Considering the 90-day investment horizon Knife River is expected to generate 2.77 times more return on investment than BlackRock Carbon. However, Knife River is 2.77 times more volatile than BlackRock Carbon Transition. It trades about 0.13 of its potential returns per unit of risk. BlackRock Carbon Transition is currently generating about 0.1 per unit of risk. If you would invest 3,551 in Knife River on August 24, 2024 and sell it today you would earn a total of 6,501 from holding Knife River or generate 183.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 75.81% |
| Values | Daily Returns |
Knife River vs. BlackRock Carbon Transition
Performance |
| Timeline |
| Knife River |
| BlackRock Carbon Tra |
Knife River and BlackRock Carbon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and BlackRock Carbon
The main advantage of trading using opposite Knife River and BlackRock Carbon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, BlackRock Carbon 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 BlackRock Carbon will offset losses from the drop in BlackRock Carbon'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 |
| BlackRock Carbon vs. Morningstar Unconstrained Allocation | BlackRock Carbon vs. High Yield Municipal Fund | BlackRock Carbon vs. Via Renewables | BlackRock Carbon vs. Knife River |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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