Correlation Between Dave Busters and Knife River
Can any of the company-specific risk be diversified away by investing in both Dave Busters 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 Dave Busters and Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dave Busters Entertainment and Knife River, you can compare the effects of market volatilities on Dave Busters 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 Dave Busters with a short position of Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dave Busters and Knife River.
Diversification Opportunities for Dave Busters and Knife River
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dave and Knife is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River and Dave Busters 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 Dave Busters Entertainment 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 Dave Busters i.e., Dave Busters and Knife River go up and down completely randomly.
Pair Corralation between Dave Busters and Knife River
Given the investment horizon of 90 days Dave Busters Entertainment is expected to under-perform the Knife River. In addition to that, Dave Busters is 1.38 times more volatile than Knife River. It trades about -0.05 of its total potential returns per unit of risk. Knife River is currently generating about 0.08 per unit of volatility. If you would invest 8,077 in Knife River on September 3, 2024 and sell it today you would earn a total of 2,273 from holding Knife River or generate 28.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dave Busters Entertainment vs. Knife River
Performance |
| Timeline |
| Dave Busters Enterta |
| Knife River |
Dave Busters and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dave Busters and Knife River
The main advantage of trading using opposite Dave Busters and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters 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.| Dave Busters vs. Marcus | Dave Busters vs. News Corp B | Dave Busters vs. Warner Music Group | Dave Busters vs. Manchester United |
| Knife River vs. Chemours Co | Knife River vs. Tyson Foods | Knife River vs. CF Industries Holdings | Knife River vs. Bassett Furniture Industries |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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