Correlation Between Kontoor Brands and Petro River

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

By analyzing existing cross correlation between Kontoor Brands and Petro River Oil, you can compare the effects of market volatilities on Kontoor Brands and Petro River 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 Kontoor Brands with a short position of Petro River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kontoor Brands and Petro River.

Diversification Opportunities for Kontoor Brands and Petro River

0.0

Correlation Coefficient

Kontoor Brands  Petro River

Pay attention - limited upside

The 3 months correlation between Kontoor and Petro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Kontoor Brands and Petro River Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petro River Oil and Kontoor Brands 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 Kontoor Brands are associated (or correlated) with Petro River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petro River Oil has no effect on the direction of Kontoor Brands i.e., Kontoor Brands and Petro River go up and down completely randomly.

Pair Corralation between Kontoor Brands and Petro River

If you would invest  0.00  in Petro River Oil on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Petro River Oil or generate 0.0% return on investment over 90 days.

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

Kontoor Brands  vs.  Petro River Oil

Kontoor Brands

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Kontoor Brands may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Petro River Oil

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petro River Oil has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Petro River is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Kontoor Brands and Petro River

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

The idea behind Kontoor Brands and Petro River Oil 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.