Correlation Between Knife River and Sonoro Gold
Can any of the company-specific risk be diversified away by investing in both Knife River and Sonoro 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 Sonoro 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 Sonoro Gold Corp, you can compare the effects of market volatilities on Knife River and Sonoro 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 Sonoro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Sonoro Gold.
Diversification Opportunities for Knife River and Sonoro Gold
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knife and Sonoro is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Sonoro Gold Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonoro Gold Corp 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 Sonoro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonoro Gold Corp has no effect on the direction of Knife River i.e., Knife River and Sonoro Gold go up and down completely randomly.
Pair Corralation between Knife River and Sonoro Gold
Considering the 90-day investment horizon Knife River is expected to generate 0.31 times more return on investment than Sonoro Gold. However, Knife River is 3.21 times less risky than Sonoro Gold. It trades about 0.14 of its potential returns per unit of risk. Sonoro Gold Corp is currently generating about 0.04 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 6,907 from holding Knife River or generate 194.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 76.36% |
| Values | Daily Returns |
Knife River vs. Sonoro Gold Corp
Performance |
| Timeline |
| Knife River |
| Sonoro Gold Corp |
Knife River and Sonoro Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Sonoro Gold
The main advantage of trading using opposite Knife River and Sonoro Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Sonoro 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 Sonoro Gold will offset losses from the drop in Sonoro Gold'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 |
| Sonoro Gold vs. Morningstar Unconstrained Allocation | Sonoro Gold vs. High Yield Municipal Fund | Sonoro Gold vs. Knife River | Sonoro Gold vs. Klckner Co SE |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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