Correlation Between Amgen and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both Amgen and KNOT Offshore 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 Amgen and KNOT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amgen Inc and KNOT Offshore Partners, you can compare the effects of market volatilities on Amgen and KNOT Offshore 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 Amgen with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amgen and KNOT Offshore.
Diversification Opportunities for Amgen and KNOT Offshore
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Amgen and KNOT is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Amgen Inc and KNOT Offshore Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNOT Offshore Partners and Amgen 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 Amgen Inc are associated (or correlated) with KNOT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNOT Offshore Partners has no effect on the direction of Amgen i.e., Amgen and KNOT Offshore go up and down completely randomly.
Pair Corralation between Amgen and KNOT Offshore
Given the investment horizon of 90 days Amgen is expected to generate 1.11 times less return on investment than KNOT Offshore. But when comparing it to its historical volatility, Amgen Inc is 1.63 times less risky than KNOT Offshore. It trades about 0.03 of its potential returns per unit of risk. KNOT Offshore Partners is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 565.00 in KNOT Offshore Partners on September 1, 2024 and sell it today you would earn a total of 18.00 from holding KNOT Offshore Partners or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amgen Inc vs. KNOT Offshore Partners
Performance |
| Timeline |
| Amgen Inc |
| KNOT Offshore Partners |
Amgen and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amgen and KNOT Offshore
The main advantage of trading using opposite Amgen and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amgen position performs unexpectedly, KNOT Offshore 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 KNOT Offshore will offset losses from the drop in KNOT Offshore's long position.| Amgen vs. Tff Pharmaceuticals | Amgen vs. Eliem Therapeutics | Amgen vs. Inhibrx | Amgen vs. Enliven Therapeutics |
| KNOT Offshore vs. USA Compression Partners | KNOT Offshore vs. Dynagas LNG Partners | KNOT Offshore vs. Crossamerica Partners LP | KNOT Offshore vs. Delek Logistics Partners |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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