Correlation Between Arrow Electronics and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both Arrow Electronics 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 Arrow Electronics and KNOT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arrow Electronics and KNOT Offshore Partners, you can compare the effects of market volatilities on Arrow Electronics 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 Arrow Electronics with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arrow Electronics and KNOT Offshore.
Diversification Opportunities for Arrow Electronics and KNOT Offshore
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arrow and KNOT is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics i.e., Arrow Electronics and KNOT Offshore go up and down completely randomly.
Pair Corralation between Arrow Electronics and KNOT Offshore
Considering the 90-day investment horizon Arrow Electronics is expected to under-perform the KNOT Offshore. In addition to that, Arrow Electronics is 1.85 times more volatile than KNOT Offshore Partners. It trades about -0.17 of its total potential returns per unit of risk. KNOT Offshore Partners is currently generating about 0.02 per unit of volatility. If you would invest 593.00 in KNOT Offshore Partners on August 31, 2024 and sell it today you would earn a total of 3.00 from holding KNOT Offshore Partners or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arrow Electronics vs. KNOT Offshore Partners
Performance |
| Timeline |
| Arrow Electronics |
| KNOT Offshore Partners |
Arrow Electronics and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arrow Electronics and KNOT Offshore
The main advantage of trading using opposite Arrow Electronics and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arrow Electronics 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.| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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