Correlation Between Corporate Office and Knowles
Can any of the company-specific risk be diversified away by investing in both Corporate Office and Knowles 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 Corporate Office and Knowles into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and Knowles, you can compare the effects of market volatilities on Corporate Office and Knowles 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 Corporate Office with a short position of Knowles. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and Knowles.
Diversification Opportunities for Corporate Office and Knowles
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Corporate and Knowles is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and Knowles in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles and Corporate Office 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 Corporate Office Properties are associated (or correlated) with Knowles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles has no effect on the direction of Corporate Office i.e., Corporate Office and Knowles go up and down completely randomly.
Pair Corralation between Corporate Office and Knowles
Assuming the 90 days horizon Corporate Office is expected to generate 1.25 times less return on investment than Knowles. But when comparing it to its historical volatility, Corporate Office Properties is 1.12 times less risky than Knowles. It trades about 0.18 of its potential returns per unit of risk. Knowles is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,750 in Knowles on September 14, 2024 and sell it today you would earn a total of 120.00 from holding Knowles or generate 6.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corporate Office Properties vs. Knowles
Performance |
| Timeline |
| Corporate Office Pro |
| Knowles |
Corporate Office and Knowles Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corporate Office and Knowles
The main advantage of trading using opposite Corporate Office and Knowles positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office position performs unexpectedly, Knowles 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 Knowles will offset losses from the drop in Knowles' long position.| Corporate Office vs. ORIX JREIT INC | Corporate Office vs. Superior Plus Corp | Corporate Office vs. SIVERS SEMICONDUCTORS AB | Corporate Office vs. Norsk Hydro ASA |
| Knowles vs. Alaska Air Group | Knowles vs. Westinghouse Air Brake | Knowles vs. Corsair Gaming | Knowles vs. Wizz Air Holdings |
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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