Correlation Between Knife River and ReTo Eco
Can any of the company-specific risk be diversified away by investing in both Knife River and ReTo Eco 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 Knife River and ReTo Eco into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knife River and ReTo Eco Solutions, you can compare the effects of market volatilities on Knife River and ReTo Eco 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 Knife River with a short position of ReTo Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and ReTo Eco.
Diversification Opportunities for Knife River and ReTo Eco
-0.85 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Knife and ReTo is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and ReTo Eco Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReTo Eco Solutions and Knife River 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 Knife River are associated (or correlated) with ReTo Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReTo Eco Solutions has no effect on the direction of Knife River i.e., Knife River and ReTo Eco go up and down completely randomly.
Pair Corralation between Knife River and ReTo Eco
Considering the 90-day investment horizon Knife River is expected to generate 0.44 times more return on investment than ReTo Eco. However, Knife River is 2.26 times less risky than ReTo Eco. It trades about 0.21 of its potential returns per unit of risk. ReTo Eco Solutions is currently generating about -0.12 per unit of risk. If you would invest 7,699 in Knife River on September 10, 2024 and sell it today you would earn a total of 2,535 from holding Knife River or generate 32.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Knife River vs. ReTo Eco Solutions
Performance |
Timeline |
Knife River |
ReTo Eco Solutions |
Knife River and ReTo Eco Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Knife River and ReTo Eco
The main advantage of trading using opposite Knife River and ReTo Eco positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knife River position performs unexpectedly, ReTo Eco 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 ReTo Eco will offset losses from the drop in ReTo Eco's long position.Knife River vs. BJs Restaurants | Knife River vs. Ziff Davis | Knife River vs. BCE Inc | Knife River vs. Park Hotels Resorts |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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