Correlation Between Castor Maritime and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both Castor Maritime 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 Castor Maritime and KNOT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Castor Maritime and KNOT Offshore Partners, you can compare the effects of market volatilities on Castor Maritime 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 Castor Maritime with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Castor Maritime and KNOT Offshore.
Diversification Opportunities for Castor Maritime and KNOT Offshore
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Castor and KNOT is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Castor Maritime 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 Castor Maritime 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 Castor Maritime 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 Castor Maritime i.e., Castor Maritime and KNOT Offshore go up and down completely randomly.
Pair Corralation between Castor Maritime and KNOT Offshore
Given the investment horizon of 90 days Castor Maritime is expected to under-perform the KNOT Offshore. But the stock apears to be less risky and, when comparing its historical volatility, Castor Maritime is 1.02 times less risky than KNOT Offshore. The stock trades about -0.35 of its potential returns per unit of risk. The KNOT Offshore Partners is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 615.00 in KNOT Offshore Partners on August 28, 2024 and sell it today you would lose (13.00) from holding KNOT Offshore Partners or give up 2.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Castor Maritime vs. KNOT Offshore Partners
Performance |
| Timeline |
| Castor Maritime |
| KNOT Offshore Partners |
Castor Maritime and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Castor Maritime and KNOT Offshore
The main advantage of trading using opposite Castor Maritime and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castor Maritime 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.| Castor Maritime vs. Seanergy Maritime Holdings | Castor Maritime vs. TOP Ships | Castor Maritime vs. United Maritime | Castor Maritime vs. Nordic American Tankers |
| 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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