Correlation Between KNOT Offshore and Amgen
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Amgen 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 KNOT Offshore and Amgen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KNOT Offshore Partners and Amgen Inc, you can compare the effects of market volatilities on KNOT Offshore and Amgen 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 KNOT Offshore with a short position of Amgen. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Amgen.
Diversification Opportunities for KNOT Offshore and Amgen
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between KNOT and Amgen is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Amgen Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amgen Inc and KNOT Offshore 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 KNOT Offshore Partners are associated (or correlated) with Amgen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amgen Inc has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Amgen go up and down completely randomly.
Pair Corralation between KNOT Offshore and Amgen
Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Amgen. But the stock apears to be less risky and, when comparing its historical volatility, KNOT Offshore Partners is 1.03 times less risky than Amgen. The stock trades about -0.06 of its potential returns per unit of risk. The Amgen Inc is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 28,068 in Amgen Inc on November 27, 2024 and sell it today you would earn a total of 2,904 from holding Amgen Inc or generate 10.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Amgen Inc
Performance |
| Timeline |
| KNOT Offshore Partners |
| Amgen Inc |
KNOT Offshore and Amgen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Amgen
The main advantage of trading using opposite KNOT Offshore and Amgen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Amgen 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 Amgen will offset losses from the drop in Amgen's long position.| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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