Correlation Between KNOT Offshore and Arrow Electronics
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Arrow Electronics 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 Arrow Electronics 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 Arrow Electronics, you can compare the effects of market volatilities on KNOT Offshore and Arrow Electronics 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 Arrow Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Arrow Electronics.
Diversification Opportunities for KNOT Offshore and Arrow Electronics
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KNOT and Arrow is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Arrow Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrow Electronics 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 Arrow Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrow Electronics has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Arrow Electronics go up and down completely randomly.
Pair Corralation between KNOT Offshore and Arrow Electronics
Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 0.54 times more return on investment than Arrow Electronics. However, KNOT Offshore Partners is 1.85 times less risky than Arrow Electronics. It trades about 0.02 of its potential returns per unit of risk. Arrow Electronics is currently generating about -0.17 per unit of risk. 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 |
KNOT Offshore Partners vs. Arrow Electronics
Performance |
| Timeline |
| KNOT Offshore Partners |
| Arrow Electronics |
KNOT Offshore and Arrow Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Arrow Electronics
The main advantage of trading using opposite KNOT Offshore and Arrow Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Arrow Electronics 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 Arrow Electronics will offset losses from the drop in Arrow Electronics' 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 |
| Arrow Electronics vs. Insight Enterprises | Arrow Electronics vs. Synnex | Arrow Electronics vs. Climb Global Solutions | Arrow Electronics vs. ScanSource |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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