Correlation Between CAZ Public and Knight Club

Can any of the company-specific risk be diversified away by investing in both CAZ Public and Knight Club 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 CAZ Public and Knight Club into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CAZ Public and Knight Club Capital, you can compare the effects of market volatilities on CAZ Public and Knight Club 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 CAZ Public with a short position of Knight Club. Check out your portfolio center. Please also check ongoing floating volatility patterns of CAZ Public and Knight Club.

Diversification Opportunities for CAZ Public and Knight Club

0.88

Correlation Coefficient

CAZ Public  Knight Club

Very poor diversification

The 3 months correlation between CAZ and Knight is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding CAZ Public and Knight Club Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knight Club Capital and CAZ Public 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 CAZ Public are associated (or correlated) with Knight Club. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knight Club Capital has no effect on the direction of CAZ Public i.e., CAZ Public and Knight Club go up and down completely randomly.

Pair Corralation between CAZ Public and Knight Club

Assuming the 90 days trading horizon CAZ Public is expected to under-perform the Knight Club. In addition to that, CAZ Public is 1.53 times more volatile than Knight Club Capital. It trades about -0.16 of its total potential returns per unit of risk. Knight Club Capital is currently generating about -0.13 per unit of volatility. If you would invest  206.00  in Knight Club Capital on December 28, 2024 and sell it today you would lose (27.00) from holding Knight Club Capital or give up 13.11% of portfolio value over 90 days.

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

CAZ Public  vs.  Knight Club Capital

CAZ Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAZ Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Knight Club Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knight Club Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with CAZ Public and Knight Club

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

The idea behind CAZ Public and Knight Club Capital 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.