Correlation Between US Global and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both US Global 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 US Global and KNOT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between US Global Investors and KNOT Offshore Partners, you can compare the effects of market volatilities on US Global 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 US Global with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of US Global and KNOT Offshore.
Diversification Opportunities for US Global and KNOT Offshore
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between GROW and KNOT is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding US Global Investors 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 US Global 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 US Global Investors 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 US Global i.e., US Global and KNOT Offshore go up and down completely randomly.
Pair Corralation between US Global and KNOT Offshore
Given the investment horizon of 90 days US Global Investors is expected to under-perform the KNOT Offshore. But the stock apears to be less risky and, when comparing its historical volatility, US Global Investors is 1.23 times less risky than KNOT Offshore. The stock trades about -0.02 of its potential returns per unit of risk. The KNOT Offshore Partners is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 615.00 in KNOT Offshore Partners on August 27, 2024 and sell it today you would lose (5.00) from holding KNOT Offshore Partners or give up 0.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
US Global Investors vs. KNOT Offshore Partners
Performance |
| Timeline |
| US Global Investors |
| KNOT Offshore Partners |
US Global and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with US Global and KNOT Offshore
The main advantage of trading using opposite US Global and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if US Global 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.| US Global vs. Gladstone Investment | US Global vs. PennantPark Floating Rate | US Global vs. Horizon Technology Finance | US Global vs. Stellus Capital Investment |
| 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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