Correlation Between KNOT Offshore and GMS
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and GMS 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 GMS 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 GMS Inc, you can compare the effects of market volatilities on KNOT Offshore and GMS 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 GMS. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and GMS.
Diversification Opportunities for KNOT Offshore and GMS
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KNOT and GMS is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and GMS Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GMS 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 GMS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GMS Inc has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and GMS go up and down completely randomly.
Pair Corralation between KNOT Offshore and GMS
Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the GMS. In addition to that, KNOT Offshore is 1.68 times more volatile than GMS Inc. It trades about -0.01 of its total potential returns per unit of risk. GMS Inc is currently generating about 0.08 per unit of volatility. If you would invest 5,370 in GMS Inc on September 4, 2024 and sell it today you would earn a total of 4,898 from holding GMS Inc or generate 91.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. GMS Inc
Performance |
| Timeline |
| KNOT Offshore Partners |
| GMS Inc |
KNOT Offshore and GMS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and GMS
The main advantage of trading using opposite KNOT Offshore and GMS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, GMS 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 GMS will offset losses from the drop in GMS'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 |
| GMS vs. Quanex Building Products | GMS vs. Apogee Enterprises | GMS vs. Azek Company | GMS vs. Beacon Roofing Supply |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Equity Valuation Check real value of public entities based on technical and fundamental data |