Correlation Between Knife River and VictoryShares WestEnd
Can any of the company-specific risk be diversified away by investing in both Knife River and VictoryShares WestEnd 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 VictoryShares WestEnd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and VictoryShares WestEnd Sector, you can compare the effects of market volatilities on Knife River and VictoryShares WestEnd 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 VictoryShares WestEnd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and VictoryShares WestEnd.
Diversification Opportunities for Knife River and VictoryShares WestEnd
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Knife and VictoryShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and VictoryShares WestEnd Sector in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VictoryShares WestEnd 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 VictoryShares WestEnd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VictoryShares WestEnd has no effect on the direction of Knife River i.e., Knife River and VictoryShares WestEnd go up and down completely randomly.
Pair Corralation between Knife River and VictoryShares WestEnd
Considering the 90-day investment horizon Knife River is expected to generate 2.98 times more return on investment than VictoryShares WestEnd. However, Knife River is 2.98 times more volatile than VictoryShares WestEnd Sector. It trades about 0.13 of its potential returns per unit of risk. VictoryShares WestEnd Sector is currently generating about 0.11 per unit of risk. If you would invest 3,551 in Knife River on August 29, 2024 and sell it today you would earn a total of 6,724 from holding Knife River or generate 189.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 76.41% |
| Values | Daily Returns |
Knife River vs. VictoryShares WestEnd Sector
Performance |
| Timeline |
| Knife River |
| VictoryShares WestEnd |
Knife River and VictoryShares WestEnd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and VictoryShares WestEnd
The main advantage of trading using opposite Knife River and VictoryShares WestEnd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, VictoryShares WestEnd 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 VictoryShares WestEnd will offset losses from the drop in VictoryShares WestEnd's long position.| Knife River vs. Cemex SAB de | Knife River vs. Boise Cascad Llc | Knife River vs. CRH PLC ADR | Knife River vs. Eagle Materials |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges |