Correlation Between Fast Retailing and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both Fast Retailing 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 Fast Retailing and KNOT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fast Retailing Co and KNOT Offshore Partners, you can compare the effects of market volatilities on Fast Retailing 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 Fast Retailing with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fast Retailing and KNOT Offshore.
Diversification Opportunities for Fast Retailing and KNOT Offshore
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Fast and KNOT is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Fast Retailing Co 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 Fast Retailing 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 Fast Retailing Co 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 Fast Retailing i.e., Fast Retailing and KNOT Offshore go up and down completely randomly.
Pair Corralation between Fast Retailing and KNOT Offshore
Assuming the 90 days horizon Fast Retailing Co is expected to under-perform the KNOT Offshore. But the pink sheet apears to be less risky and, when comparing its historical volatility, Fast Retailing Co is 1.93 times less risky than KNOT Offshore. The pink sheet trades about -0.2 of its potential returns per unit of risk. The KNOT Offshore Partners is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 548.00 in KNOT Offshore Partners on October 22, 2024 and sell it today you would earn a total of 43.00 from holding KNOT Offshore Partners or generate 7.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Fast Retailing Co vs. KNOT Offshore Partners
Performance |
| Timeline |
| Fast Retailing |
| KNOT Offshore Partners |
Fast Retailing and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fast Retailing and KNOT Offshore
The main advantage of trading using opposite Fast Retailing and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fast Retailing 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.| Fast Retailing vs. Industria de Diseno | Fast Retailing vs. Aritzia | Fast Retailing vs. Shoe Carnival | Fast Retailing vs. Genesco |
| 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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