Correlation Between KNOT Offshore and Summit Hotel
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Summit Hotel 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 Summit Hotel 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 Summit Hotel Properties, you can compare the effects of market volatilities on KNOT Offshore and Summit Hotel 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 Summit Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Summit Hotel.
Diversification Opportunities for KNOT Offshore and Summit Hotel
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KNOT and Summit is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Summit Hotel Properties in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Hotel Properties 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 Summit Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Hotel Properties has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Summit Hotel go up and down completely randomly.
Pair Corralation between KNOT Offshore and Summit Hotel
Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Summit Hotel. But the stock apears to be less risky and, when comparing its historical volatility, KNOT Offshore Partners is 1.07 times less risky than Summit Hotel. The stock trades about -0.22 of its potential returns per unit of risk. The Summit Hotel Properties is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 664.00 in Summit Hotel Properties on September 3, 2024 and sell it today you would lose (6.00) from holding Summit Hotel Properties or give up 0.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Summit Hotel Properties
Performance |
| Timeline |
| KNOT Offshore Partners |
| Summit Hotel Properties |
KNOT Offshore and Summit Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Summit Hotel
The main advantage of trading using opposite KNOT Offshore and Summit Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Summit Hotel 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 Summit Hotel will offset losses from the drop in Summit Hotel's long position.| KNOT Offshore vs. International Seaways | KNOT Offshore vs. Scorpio Tankers | KNOT Offshore vs. Dorian LPG | KNOT Offshore vs. Teekay Tankers |
| Summit Hotel vs. Sotherly Hotels | Summit Hotel vs. Service Properties Trust | Summit Hotel vs. Sunstone Hotel Investors | Summit Hotel vs. Ryman Hospitality 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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