Correlation Between Knife River and Valic Company
Can any of the company-specific risk be diversified away by investing in both Knife River and Valic Company 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 Valic Company into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and Valic Company I, you can compare the effects of market volatilities on Knife River and Valic Company 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 Valic Company. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and Valic Company.
Diversification Opportunities for Knife River and Valic Company
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Knife and Valic is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Valic Company I in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Valic Company I 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 Valic Company. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Valic Company I has no effect on the direction of Knife River i.e., Knife River and Valic Company go up and down completely randomly.
Pair Corralation between Knife River and Valic Company
Considering the 90-day investment horizon Knife River is expected to generate 4.33 times more return on investment than Valic Company. However, Knife River is 4.33 times more volatile than Valic Company I. It trades about 0.13 of its potential returns per unit of risk. Valic Company I is currently generating about 0.09 per unit of risk. If you would invest 3,551 in Knife River on August 26, 2024 and sell it today you would earn a total of 6,714 from holding Knife River or generate 189.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 75.86% |
| Values | Daily Returns |
Knife River vs. Valic Company I
Performance |
| Timeline |
| Knife River |
| Valic Company I |
Knife River and Valic Company Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knife River and Valic Company
The main advantage of trading using opposite Knife River and Valic Company positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, Valic Company 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 Valic Company will offset losses from the drop in Valic Company'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 |
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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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