Correlation Between Knife River and Stance Equity
Can any of the company-specific risk be diversified away by investing in both Knife River and Stance 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 Stance 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 Stance Equity ESG, you can compare the effects of market volatilities on Knife River and Stance 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 Stance Equity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Stance Equity.
Diversification Opportunities for Knife River and Stance Equity
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knife and Stance is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Stance Equity ESG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stance Equity ESG 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 Stance Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stance Equity ESG has no effect on the direction of Knife River i.e., Knife River and Stance Equity go up and down completely randomly.
Pair Corralation between Knife River and Stance Equity
Considering the 90-day investment horizon Knife River is expected to generate 4.6 times more return on investment than Stance Equity. However, Knife River is 4.6 times more volatile than Stance Equity ESG. It trades about 0.11 of its potential returns per unit of risk. Stance Equity ESG is currently generating about 0.36 per unit of risk. If you would invest 9,732 in Knife River on September 1, 2024 and sell it today you would earn a total of 618.00 from holding Knife River or generate 6.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Knife River vs. Stance Equity ESG
Performance |
| Timeline |
| Knife River |
| Stance Equity ESG |
Knife River and Stance Equity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Stance Equity
The main advantage of trading using opposite Knife River and Stance Equity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Stance 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 Stance Equity will offset losses from the drop in Stance 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 |
| Stance Equity vs. iShares ESG Screened | Stance Equity vs. Innovator Equity Accelerated | Stance Equity vs. iShares ESG Screened | Stance Equity vs. Innovator Equity Accelerated |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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