Correlation Between Knight Transportation and Atlas Corp

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

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

Diversification Opportunities for Knight Transportation and Atlas Corp

0.65

Correlation Coefficient

Knight Transportation  Atlas Corp

Poor diversification

The 3 months correlation between Knight and Atlas is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Knight Transportation and Atlas Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Atlas Corp and Knight Transportation 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 Knight Transportation are associated (or correlated) with Atlas Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Atlas Corp has no effect on the direction of Knight Transportation i.e., Knight Transportation and Atlas Corp go up and down completely randomly.

Pair Corralation between Knight Transportation and Atlas Corp

Considering the 90-day investment horizon Knight Transportation is expected to generate 5.15 times more return on investment than Atlas Corp. However, Knight Transportation is 5.15 times more volatile than Atlas Corp. It trades about 0.08 of its potential returns per unit of risk. Atlas Corp is currently generating about 0.08 per unit of risk. If you would invest  5,181  in Knight Transportation on September 12, 2024 and sell it today you would earn a total of  472.00  from holding Knight Transportation or generate 9.11% return on investment over 90 days.

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

Knight Transportation  vs.  Atlas Corp

Knight Transportation

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Knight Transportation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Knight Transportation may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Atlas Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Atlas Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Atlas Corp is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Knight Transportation and Atlas Corp

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

The idea behind Knight Transportation and Atlas 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.

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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..