Correlation Between Knowles Cor and Forge Global

Can any of the company-specific risk be diversified away by investing in both Knowles Cor and Forge Global 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 Knowles Cor and Forge Global into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Knowles Cor and Forge Global Holdings, you can compare the effects of market volatilities on Knowles Cor and Forge Global 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 Knowles Cor with a short position of Forge Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knowles Cor and Forge Global.

Diversification Opportunities for Knowles Cor and Forge Global

-0.44

Correlation Coefficient

Knowles Cor  Forge Global

Very good diversification

The 3 months correlation between Knowles and Forge is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Knowles Cor and Forge Global Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Forge Global Holdings and Knowles Cor 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 Knowles Cor are associated (or correlated) with Forge Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Forge Global Holdings has no effect on the direction of Knowles Cor i.e., Knowles Cor and Forge Global go up and down completely randomly.

Pair Corralation between Knowles Cor and Forge Global

Allowing for the 90-day total investment horizon Knowles Cor is expected to generate 0.39 times more return on investment than Forge Global. However, Knowles Cor is 2.54 times less risky than Forge Global. It trades about 0.1 of its potential returns per unit of risk. Forge Global Holdings is currently generating about -0.04 per unit of risk. If you would invest  1,739  in Knowles Cor on September 2, 2024 and sell it today you would earn a total of  207.00  from holding Knowles Cor or generate 11.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Knowles Cor  vs.  Forge Global Holdings

Knowles Cor

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Knowles Cor are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Knowles Cor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Forge Global Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forge Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Knowles Cor and Forge Global

The main advantage of trading using opposite Knowles Cor and Forge Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knowles Cor position performs unexpectedly, Forge Global 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 Forge Global will offset losses from the drop in Forge Global's long position.

The idea behind Knowles Cor and Forge Global Holdings 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.