Correlation Between Knife River and Xperi Corp

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

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

Diversification Opportunities for Knife River and Xperi Corp

0.06

Correlation Coefficient

Knife River  Xperi Corp

Significant diversification

The 3 months correlation between Knife and Xperi is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Knife River and Xperi Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xperi Corp 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 Xperi Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xperi Corp has no effect on the direction of Knife River i.e., Knife River and Xperi Corp go up and down completely randomly.

Pair Corralation between Knife River and Xperi Corp

If you would invest  4,393  in Knife River on March 18, 2024 and sell it today you would earn a total of  0.00  from holding Knife River or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	5.56%
Values	Daily Returns

Knife River  vs.  Xperi Corp

Knife River

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Knife River has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Knife River is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Xperi Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xperi Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in July 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Knife River and Xperi Corp

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

The idea behind Knife River and Xperi Corp 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.