Correlation Between Knife River and EA Series

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

By analyzing existing cross correlation between Knife River and EA Series Trust, you can compare the effects of market volatilities on Knife River and EA Series 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 EA Series. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knife River and EA Series.

Diversification Opportunities for Knife River and EA Series

0.78

Correlation Coefficient

Knife River  EA Series

Poor diversification

The 3 months correlation between Knife and MDLV is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and EA Series Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EA Series Trust 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 EA Series. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EA Series Trust has no effect on the direction of Knife River i.e., Knife River and EA Series go up and down completely randomly.

Pair Corralation between Knife River and EA Series

Considering the 90-day investment horizon Knife River is expected to generate 3.75 times more return on investment than EA Series. However, Knife River is 3.75 times more volatile than EA Series Trust. It trades about 0.04 of its potential returns per unit of risk. EA Series Trust is currently generating about 0.13 per unit of risk. If you would invest  8,085  in Knife River on July 5, 2024 and sell it today you would earn a total of  754.00  from holding Knife River or generate 9.33% return on investment over 90 days.

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

Knife River  vs.  EA Series Trust

Knife River

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Knife River are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Knife River reported solid returns over the last few months and may actually be approaching a breakup point.

EA Series Trust

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in EA Series Trust are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, EA Series may actually be approaching a critical reversion point that can send shares even higher in November 2024.

Pair Trading with Knife River and EA Series

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

The idea behind Knife River and EA Series Trust 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.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..