Correlation Between Knife River and IShares ESG
Can any of the company-specific risk be diversified away by investing in both Knife River and IShares ESG 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 ESG 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 ESG MSCI, you can compare the effects of market volatilities on Knife River and IShares ESG 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 ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and IShares ESG.
Diversification Opportunities for Knife River and IShares ESG
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Knife and IShares is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and iShares ESG MSCI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares ESG MSCI 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 ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares ESG MSCI has no effect on the direction of Knife River i.e., Knife River and IShares ESG go up and down completely randomly.
Pair Corralation between Knife River and IShares ESG
Considering the 90-day investment horizon Knife River is expected to generate 2.62 times more return on investment than IShares ESG. However, Knife River is 2.62 times more volatile than iShares ESG MSCI. It trades about 0.12 of its potential returns per unit of risk. iShares ESG MSCI is currently generating about 0.12 per unit of risk. If you would invest 4,098 in Knife River on August 31, 2024 and sell it today you would earn a total of 6,252 from holding Knife River or generate 152.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. iShares ESG MSCI
Performance |
| Timeline |
| Knife River |
| iShares ESG MSCI |
Knife River and IShares ESG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and IShares ESG
The main advantage of trading using opposite Knife River and IShares ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, IShares ESG 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 ESG will offset losses from the drop in IShares ESG's long position.| Knife River vs. Cedar Realty Trust | Knife River vs. Freedom Holding Corp | Knife River vs. Aldel Financial II | Knife River vs. Artisan Partners Asset |
| IShares ESG vs. Xtrackers MSCI USA | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware | IShares ESG vs. iShares ESG Aware |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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