Correlation Between Keweenaw Land and National Stock

Can any of the company-specific risk be diversified away by investing in both Keweenaw Land and National Stock 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 Keweenaw Land and National Stock into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Keweenaw Land Association and National Stock Yards, you can compare the effects of market volatilities on Keweenaw Land and National Stock 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 Keweenaw Land with a short position of National Stock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Keweenaw Land and National Stock.

Diversification Opportunities for Keweenaw Land and National Stock

-0.26

Correlation Coefficient

Keweenaw Land  National Stock

Very good diversification

The 3 months correlation between Keweenaw and National is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Keweenaw Land Association and National Stock Yards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Stock Yards and Keweenaw Land 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 Keweenaw Land Association are associated (or correlated) with National Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Stock Yards has no effect on the direction of Keweenaw Land i.e., Keweenaw Land and National Stock go up and down completely randomly.

Pair Corralation between Keweenaw Land and National Stock

Given the investment horizon of 90 days Keweenaw Land Association is expected to generate 3.6 times more return on investment than National Stock. However, Keweenaw Land is 3.6 times more volatile than National Stock Yards. It trades about 0.12 of its potential returns per unit of risk. National Stock Yards is currently generating about -0.03 per unit of risk. If you would invest  3,500  in Keweenaw Land Association on October 23, 2024 and sell it today you would earn a total of  294.00  from holding Keweenaw Land Association or generate 8.4% return on investment over 90 days.

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

Keweenaw Land Association  vs.  National Stock Yards

Keweenaw Land Association

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Keweenaw Land Association are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Keweenaw Land is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

National Stock Yards

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Stock Yards are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, National Stock is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Keweenaw Land and National Stock

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

The idea behind Keweenaw Land Association and National Stock Yards 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.