Correlation Between Knowles Cor and Radware

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

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

Diversification Opportunities for Knowles Cor and Radware

0.45

Correlation Coefficient

Knowles Cor  Radware

Very weak diversification

The 3 months correlation between Knowles and Radware is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Knowles Cor and Radware in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Radware 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 Radware. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Radware has no effect on the direction of Knowles Cor i.e., Knowles Cor and Radware go up and down completely randomly.

Pair Corralation between Knowles Cor and Radware

Allowing for the 90-day total investment horizon Knowles Cor is expected to generate 0.91 times more return on investment than Radware. However, Knowles Cor is 1.1 times less risky than Radware. It trades about 0.1 of its potential returns per unit of risk. Radware is currently generating about 0.04 per unit of risk. If you would invest  1,785  in Knowles Cor on September 26, 2024 and sell it today you would earn a total of  206.00  from holding Knowles Cor or generate 11.54% return on investment over 90 days.

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

Knowles Cor  vs.  Radware

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 uncertain basic indicators, Knowles Cor may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Radware

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Radware are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Radware is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Knowles Cor and Radware

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

The idea behind Knowles Cor and Radware 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.