Correlation Between Knife River and VanEck Morningstar
Can any of the company-specific risk be diversified away by investing in both Knife River and VanEck Morningstar 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 VanEck Morningstar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and VanEck Morningstar Wide, you can compare the effects of market volatilities on Knife River and VanEck Morningstar 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 VanEck Morningstar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and VanEck Morningstar.
Diversification Opportunities for Knife River and VanEck Morningstar
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knife and VanEck is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and VanEck Morningstar Wide in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Morningstar Wide 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 VanEck Morningstar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Morningstar Wide has no effect on the direction of Knife River i.e., Knife River and VanEck Morningstar go up and down completely randomly.
Pair Corralation between Knife River and VanEck Morningstar
Considering the 90-day investment horizon Knife River is expected to generate 4.18 times more return on investment than VanEck Morningstar. However, Knife River is 4.18 times more volatile than VanEck Morningstar Wide. It trades about 0.16 of its potential returns per unit of risk. VanEck Morningstar Wide is currently generating about 0.1 per unit of risk. If you would invest 9,265 in Knife River on August 25, 2024 and sell it today you would earn a total of 1,000.00 from holding Knife River or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. VanEck Morningstar Wide
Performance |
| Timeline |
| Knife River |
| VanEck Morningstar Wide |
Knife River and VanEck Morningstar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and VanEck Morningstar
The main advantage of trading using opposite Knife River and VanEck Morningstar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, VanEck Morningstar 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 VanEck Morningstar will offset losses from the drop in VanEck Morningstar's long position.| Knife River vs. Chester Mining | Knife River vs. Aldel Financial II | Knife River vs. NetSol Technologies | Knife River vs. ServiceNow |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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