Correlation Between Knife River and Microchip Technology
Can any of the company-specific risk be diversified away by investing in both Knife River and Microchip Technology 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 Microchip Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Microchip Technology, you can compare the effects of market volatilities on Knife River and Microchip Technology 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 Microchip Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Microchip Technology.
Diversification Opportunities for Knife River and Microchip Technology
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Knife and Microchip is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Microchip Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Microchip Technology 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 Microchip Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Microchip Technology has no effect on the direction of Knife River i.e., Knife River and Microchip Technology go up and down completely randomly.
Pair Corralation between Knife River and Microchip Technology
Considering the 90-day investment horizon Knife River is expected to under-perform the Microchip Technology. But the stock apears to be less risky and, when comparing its historical volatility, Knife River is 1.15 times less risky than Microchip Technology. The stock trades about -0.13 of its potential returns per unit of risk. The Microchip Technology is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 5,680 in Microchip Technology on November 27, 2024 and sell it today you would earn a total of 403.00 from holding Microchip Technology or generate 7.1% 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. Microchip Technology
Performance |
| Timeline |
| Knife River |
| Microchip Technology |
Knife River and Microchip Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Microchip Technology
The main advantage of trading using opposite Knife River and Microchip Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Microchip Technology 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 Microchip Technology will offset losses from the drop in Microchip Technology's long position.| Knife River vs. Franklin Street Properties | Knife River vs. NL Industries | Knife River vs. Eddy Smart Home | Knife River vs. Alto Ingredients |
| Microchip Technology vs. Texas Instruments Incorporated | Microchip Technology vs. ON Semiconductor | Microchip Technology vs. Analog Devices | Microchip Technology vs. Qorvo Inc |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |