Correlation Between Stellar and Knowles Cor
Can any of the company-specific risk be diversified away by investing in both Stellar and Knowles Cor 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 Stellar and Knowles Cor into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stellar and Knowles Cor, you can compare the effects of market volatilities on Stellar and Knowles Cor 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 Stellar with a short position of Knowles Cor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stellar and Knowles Cor.
Diversification Opportunities for Stellar and Knowles Cor
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Stellar and Knowles is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Stellar and Knowles Cor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knowles Cor and Stellar 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 Stellar are associated (or correlated) with Knowles Cor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knowles Cor has no effect on the direction of Stellar i.e., Stellar and Knowles Cor go up and down completely randomly.
Pair Corralation between Stellar and Knowles Cor
Assuming the 90 days trading horizon Stellar is expected to generate 6.56 times more return on investment than Knowles Cor. However, Stellar is 6.56 times more volatile than Knowles Cor. It trades about 0.25 of its potential returns per unit of risk. Knowles Cor is currently generating about 0.08 per unit of risk. If you would invest 9.26 in Stellar on November 1, 2024 and sell it today you would earn a total of 33.74 from holding Stellar or generate 364.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.75% |
| Values | Daily Returns |
Stellar vs. Knowles Cor
Performance |
| Timeline |
| Stellar |
| Knowles Cor |
Stellar and Knowles Cor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stellar and Knowles Cor
The main advantage of trading using opposite Stellar and Knowles Cor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stellar position performs unexpectedly, Knowles Cor 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 Cor will offset losses from the drop in Knowles Cor's long position.The idea behind Stellar and Knowles Cor pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Knowles Cor vs. Mynaric AG ADR | Knowles Cor vs. Comtech Telecommunications Corp | Knowles Cor vs. Ituran Location and | Knowles Cor vs. Aviat Networks |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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