Correlation Between Knife River and Mexican Gold
Can any of the company-specific risk be diversified away by investing in both Knife River and Mexican Gold 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 Mexican Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Mexican Gold Mining, you can compare the effects of market volatilities on Knife River and Mexican Gold 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 Mexican Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Mexican Gold.
Diversification Opportunities for Knife River and Mexican Gold
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Knife and Mexican is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Mexican Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mexican Gold Mining 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 Mexican Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mexican Gold Mining has no effect on the direction of Knife River i.e., Knife River and Mexican Gold go up and down completely randomly.
Pair Corralation between Knife River and Mexican Gold
Considering the 90-day investment horizon Knife River is expected to generate 0.25 times more return on investment than Mexican Gold. However, Knife River is 4.05 times less risky than Mexican Gold. It trades about 0.12 of its potential returns per unit of risk. Mexican Gold Mining is currently generating about 0.01 per unit of risk. If you would invest 4,098 in Knife River on August 31, 2024 and sell it today you would earn a total of 6,252 from holding Knife River or generate 152.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Knife River vs. Mexican Gold Mining
Performance |
| Timeline |
| Knife River |
| Mexican Gold Mining |
Knife River and Mexican Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Mexican Gold
The main advantage of trading using opposite Knife River and Mexican Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Mexican Gold 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 Mexican Gold will offset losses from the drop in Mexican Gold's long position.| Knife River vs. Cedar Realty Trust | Knife River vs. Freedom Holding Corp | Knife River vs. Aldel Financial II | Knife River vs. Artisan Partners Asset |
| Mexican Gold vs. Mantaro Silver Corp | Mexican Gold vs. Monumental Minerals Corp | Mexican Gold vs. Leocor Gold | Mexican Gold vs. Riverside Resources |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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