Correlation Between KNOT Offshore and Fresh2
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Fresh2 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 Fresh2 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 Fresh2 Group, you can compare the effects of market volatilities on KNOT Offshore and Fresh2 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 Fresh2. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Fresh2.
Diversification Opportunities for KNOT Offshore and Fresh2
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KNOT and Fresh2 is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Fresh2 Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fresh2 Group 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 Fresh2. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fresh2 Group has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Fresh2 go up and down completely randomly.
Pair Corralation between KNOT Offshore and Fresh2
Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 0.3 times more return on investment than Fresh2. However, KNOT Offshore Partners is 3.38 times less risky than Fresh2. It trades about 0.01 of its potential returns per unit of risk. Fresh2 Group is currently generating about -0.05 per unit of risk. If you would invest 578.00 in KNOT Offshore Partners on September 1, 2024 and sell it today you would earn a total of 5.00 from holding KNOT Offshore Partners or generate 0.87% 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. Fresh2 Group
Performance |
| Timeline |
| KNOT Offshore Partners |
| Fresh2 Group |
KNOT Offshore and Fresh2 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Fresh2
The main advantage of trading using opposite KNOT Offshore and Fresh2 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Fresh2 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 Fresh2 will offset losses from the drop in Fresh2'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 |
| Fresh2 vs. Sun Country Airlines | Fresh2 vs. JBG SMITH Properties | Fresh2 vs. Smith Douglas Homes | Fresh2 vs. Hudson Pacific Properties |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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