Correlation Between Knife River and Simplify Equity
Can any of the company-specific risk be diversified away by investing in both Knife River and Simplify Equity 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 Simplify Equity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Simplify Equity PLUS, you can compare the effects of market volatilities on Knife River and Simplify Equity 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 Simplify Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Simplify Equity.
Diversification Opportunities for Knife River and Simplify Equity
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Knife and Simplify is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Simplify Equity PLUS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Equity PLUS 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 Simplify Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Equity PLUS has no effect on the direction of Knife River i.e., Knife River and Simplify Equity go up and down completely randomly.
Pair Corralation between Knife River and Simplify Equity
Considering the 90-day investment horizon Knife River is expected to generate 1.16 times less return on investment than Simplify Equity. In addition to that, Knife River is 2.58 times more volatile than Simplify Equity PLUS. It trades about 0.11 of its total potential returns per unit of risk. Simplify Equity PLUS is currently generating about 0.32 per unit of volatility. If you would invest 4,147 in Simplify Equity PLUS on September 1, 2024 and sell it today you would earn a total of 369.00 from holding Simplify Equity PLUS or generate 8.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Knife River vs. Simplify Equity PLUS
Performance |
| Timeline |
| Knife River |
| Simplify Equity PLUS |
Knife River and Simplify Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Simplify Equity
The main advantage of trading using opposite Knife River and Simplify Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Simplify Equity 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 Simplify Equity will offset losses from the drop in Simplify Equity's long position.| Knife River vs. Park Hotels Resorts | Knife River vs. The Wendys Co | Knife River vs. Dave Busters Entertainment | Knife River vs. Playa Hotels Resorts |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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