Correlation Between Knowles Cor and Frequency Electronics
Can any of the company-specific risk be diversified away by investing in both Knowles Cor and Frequency Electronics 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 Frequency Electronics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Knowles Cor and Frequency Electronics, you can compare the effects of market volatilities on Knowles Cor and Frequency Electronics 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 Frequency Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Knowles Cor and Frequency Electronics.
Diversification Opportunities for Knowles Cor and Frequency Electronics
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Knowles and Frequency is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Knowles Cor and Frequency Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frequency Electronics 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 Frequency Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frequency Electronics has no effect on the direction of Knowles Cor i.e., Knowles Cor and Frequency Electronics go up and down completely randomly.
Pair Corralation between Knowles Cor and Frequency Electronics
Allowing for the 90-day total investment horizon Knowles Cor is expected to generate 1.17 times more return on investment than Frequency Electronics. However, Knowles Cor is 1.17 times more volatile than Frequency Electronics. It trades about 0.15 of its potential returns per unit of risk. Frequency Electronics is currently generating about -0.29 per unit of risk. If you would invest 1,534 in Knowles Cor on January 25, 2024 and sell it today you would earn a total of 80.00 from holding Knowles Cor or generate 5.22% 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. Frequency Electronics
Performance |
| Timeline |
| Knowles Cor |
| Frequency Electronics |
Knowles Cor and Frequency Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Knowles Cor and Frequency Electronics
The main advantage of trading using opposite Knowles Cor and Frequency Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Knowles Cor position performs unexpectedly, Frequency Electronics 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 Frequency Electronics will offset losses from the drop in Frequency Electronics' long position.| Knowles Cor vs. Mynaric AG ADR | Knowles Cor vs. Comtech Telecommunications Corp | Knowles Cor vs. Ituran Location and | Knowles Cor vs. Aviat Networks |
| Frequency Electronics vs. BK Technologies | Frequency Electronics vs. Iteris Inc | Frequency Electronics vs. Actelis Networks | Frequency Electronics vs. Lantronix |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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