Correlation Between Knife River and Spring Valley
Can any of the company-specific risk be diversified away by investing in both Knife River and Spring Valley 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 Spring Valley into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Spring Valley Acquisition, you can compare the effects of market volatilities on Knife River and Spring Valley 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 Spring Valley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Spring Valley.
Diversification Opportunities for Knife River and Spring Valley
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knife and Spring is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Spring Valley Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spring Valley Acquisition 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 Spring Valley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spring Valley Acquisition has no effect on the direction of Knife River i.e., Knife River and Spring Valley go up and down completely randomly.
Pair Corralation between Knife River and Spring Valley
Considering the 90-day investment horizon Knife River is expected to generate 6.62 times more return on investment than Spring Valley. However, Knife River is 6.62 times more volatile than Spring Valley Acquisition. It trades about 0.12 of its potential returns per unit of risk. Spring Valley Acquisition is currently generating about 0.03 per unit of risk. If you would invest 7,171 in Knife River on August 23, 2024 and sell it today you would earn a total of 2,659 from holding Knife River or generate 37.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Knife River vs. Spring Valley Acquisition
Performance |
| Timeline |
| Knife River |
| Spring Valley Acquisition |
Knife River and Spring Valley Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Spring Valley
The main advantage of trading using opposite Knife River and Spring Valley positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Spring Valley 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 Spring Valley will offset losses from the drop in Spring Valley'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 |
| Spring Valley vs. Western Acquisition Ventures | Spring Valley vs. ABIVAX Socit Anonyme | Spring Valley vs. SCOR PK | Spring Valley vs. HUMANA INC |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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