Correlation Between Knife River and IShares MSCI
Can any of the company-specific risk be diversified away by investing in both Knife River and IShares MSCI 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 IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and iShares MSCI USA, you can compare the effects of market volatilities on Knife River and IShares MSCI 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 IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and IShares MSCI.
Diversification Opportunities for Knife River and IShares MSCI
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Knife and IShares is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and iShares MSCI USA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI USA 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 IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI USA has no effect on the direction of Knife River i.e., Knife River and IShares MSCI go up and down completely randomly.
Pair Corralation between Knife River and IShares MSCI
Considering the 90-day investment horizon Knife River is expected to generate 3.06 times more return on investment than IShares MSCI. However, Knife River is 3.06 times more volatile than iShares MSCI USA. It trades about 0.14 of its potential returns per unit of risk. iShares MSCI USA is currently generating about 0.15 per unit of risk. If you would invest 7,071 in Knife River on August 29, 2024 and sell it today you would earn a total of 3,387 from holding Knife River or generate 47.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. iShares MSCI USA
Performance |
| Timeline |
| Knife River |
| iShares MSCI USA |
Knife River and IShares MSCI Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and IShares MSCI
The main advantage of trading using opposite Knife River and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, IShares MSCI 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 IShares MSCI will offset losses from the drop in IShares MSCI'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 |
| IShares MSCI vs. Morningstar Unconstrained Allocation | IShares MSCI vs. High Yield Municipal Fund | IShares MSCI vs. Via Renewables | IShares MSCI 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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