Correlation Between NYSE Composite and Knife River
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Knife River 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 NYSE Composite and Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Knife River, you can compare the effects of market volatilities on NYSE Composite and Knife River 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 NYSE Composite with a short position of Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Knife River.
Diversification Opportunities for NYSE Composite and Knife River
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NYSE and Knife is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River and NYSE Composite 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 NYSE Composite are associated (or correlated) with Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of NYSE Composite i.e., NYSE Composite and Knife River go up and down completely randomly.
Pair Corralation between NYSE Composite and Knife River
Assuming the 90 days trading horizon NYSE Composite is expected to generate 2.73 times less return on investment than Knife River. But when comparing it to its historical volatility, NYSE Composite is 4.84 times less risky than Knife River. It trades about 0.21 of its potential returns per unit of risk. Knife River is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 9,575 in Knife River on August 27, 2024 and sell it today you would earn a total of 690.00 from holding Knife River or generate 7.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Knife River
Performance |
| Timeline |
NYSE Composite and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Knife River
Pair trading matchups for Knife River
Pair Trading with NYSE Composite and Knife River
The main advantage of trading using opposite NYSE Composite and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Knife River 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 Knife River will offset losses from the drop in Knife River's long position.| NYSE Composite vs. Grocery Outlet Holding | NYSE Composite vs. Tencent Music Entertainment | NYSE Composite vs. SunLink Health Systems | NYSE Composite vs. Getty Realty |
| Knife River vs. Cemex SAB de | Knife River vs. Boise Cascad Llc | Knife River vs. CRH PLC ADR | Knife River vs. Eagle Materials |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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