Correlation Between Knife River and Emerald Expositions

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

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

Diversification Opportunities for Knife River and Emerald Expositions

-0.39

Correlation Coefficient

Knife River  Emerald Expositions

Very good diversification

The 3 months correlation between Knife and Emerald is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Emerald Expositions Events in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerald Expositions 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 Emerald Expositions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerald Expositions has no effect on the direction of Knife River i.e., Knife River and Emerald Expositions go up and down completely randomly.

Pair Corralation between Knife River and Emerald Expositions

Considering the 90-day investment horizon Knife River is expected to generate 0.28 times more return on investment than Emerald Expositions. However, Knife River is 3.56 times less risky than Emerald Expositions. It trades about 0.37 of its potential returns per unit of risk. Emerald Expositions Events is currently generating about -0.03 per unit of risk. If you would invest  7,628  in Knife River on June 29, 2024 and sell it today you would earn a total of  1,279  from holding Knife River or generate 16.77% return on investment over 90 days.

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

Knife River  vs.  Emerald Expositions Events

Knife River

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Knife River are ranked lower than 14 (%) 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.

Emerald Expositions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerald Expositions Events has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Emerald Expositions is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Knife River and Emerald Expositions

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

The idea behind Knife River and Emerald Expositions Events 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.