Correlation Between Knowles Cor and EchoStar

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

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

Diversification Opportunities for Knowles Cor and EchoStar

-0.46

Correlation Coefficient

Knowles Cor  EchoStar

Very good diversification

The 3 months correlation between Knowles and EchoStar is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Knowles Cor and EchoStar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EchoStar 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 EchoStar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EchoStar has no effect on the direction of Knowles Cor i.e., Knowles Cor and EchoStar go up and down completely randomly.

Pair Corralation between Knowles Cor and EchoStar

Allowing for the 90-day total investment horizon Knowles Cor is expected to under-perform the EchoStar. But the stock apears to be less risky and, when comparing its historical volatility, Knowles Cor is 1.84 times less risky than EchoStar. The stock trades about -0.28 of its potential returns per unit of risk. The EchoStar is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,301  in EchoStar on December 29, 2024 and sell it today you would earn a total of  198.00  from holding EchoStar or generate 8.6% return on investment over 90 days.

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

Knowles Cor  vs.  EchoStar

Knowles Cor

Risk-Adjusted Performance

Very Weak

Over the last 90 days Knowles Cor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

EchoStar

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in EchoStar are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, EchoStar may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Knowles Cor and EchoStar

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

The idea behind Knowles Cor and EchoStar 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.