Correlation Between Spectrum Brands and Knife River
Can any of the company-specific risk be diversified away by investing in both Spectrum Brands 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 Spectrum Brands and Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Spectrum Brands Holdings and Knife River, you can compare the effects of market volatilities on Spectrum Brands 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 Spectrum Brands with a short position of Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectrum Brands and Knife River.
Diversification Opportunities for Spectrum Brands and Knife River
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Spectrum and Knife is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Spectrum Brands Holdings and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River and Spectrum Brands 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 Spectrum Brands Holdings 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 Spectrum Brands i.e., Spectrum Brands and Knife River go up and down completely randomly.
Pair Corralation between Spectrum Brands and Knife River
Considering the 90-day investment horizon Spectrum Brands is expected to generate 2.62 times less return on investment than Knife River. But when comparing it to its historical volatility, Spectrum Brands Holdings is 2.56 times less risky than Knife River. It trades about 0.04 of its potential returns per unit of risk. Knife River is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 10,232 in Knife River on November 5, 2024 and sell it today you would earn a total of 126.00 from holding Knife River or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Spectrum Brands Holdings vs. Knife River
Performance |
| Timeline |
| Spectrum Brands Holdings |
| Knife River |
Spectrum Brands and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Spectrum Brands and Knife River
The main advantage of trading using opposite Spectrum Brands and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spectrum Brands 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.| Spectrum Brands vs. European Wax Center | Spectrum Brands vs. Inter Parfums | Spectrum Brands vs. Mannatech Incorporated | Spectrum Brands vs. Nu Skin Enterprises |
| Knife River vs. RH | Knife River vs. Treasury Wine Estates | Knife River vs. Oatly Group AB | Knife River vs. Naked Wines plc |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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