Correlation Between Knife River and Simplify Volatility
Can any of the company-specific risk be diversified away by investing in both Knife River and Simplify Volatility 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 Volatility 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 Volatility Premium, you can compare the effects of market volatilities on Knife River and Simplify Volatility 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 Volatility. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Simplify Volatility.
Diversification Opportunities for Knife River and Simplify Volatility
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Knife and Simplify is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Simplify Volatility Premium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplify Volatility 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 Volatility. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplify Volatility has no effect on the direction of Knife River i.e., Knife River and Simplify Volatility go up and down completely randomly.
Pair Corralation between Knife River and Simplify Volatility
Considering the 90-day investment horizon Knife River is expected to generate 3.41 times more return on investment than Simplify Volatility. However, Knife River is 3.41 times more volatile than Simplify Volatility Premium. It trades about 0.14 of its potential returns per unit of risk. Simplify Volatility Premium is currently generating about 0.1 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 | Insignificant |
| Accuracy | 76.36% |
| Values | Daily Returns |
Knife River vs. Simplify Volatility Premium
Performance |
| Timeline |
| Knife River |
| Simplify Volatility |
Knife River and Simplify Volatility Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Simplify Volatility
The main advantage of trading using opposite Knife River and Simplify Volatility positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Simplify Volatility 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 Volatility will offset losses from the drop in Simplify Volatility'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 |
| Simplify Volatility vs. Morningstar Unconstrained Allocation | Simplify Volatility vs. High Yield Municipal Fund | Simplify Volatility vs. Via Renewables | Simplify Volatility vs. Knife River |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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