Correlation Between KNOT Offshore and International Seaways
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and International Seaways 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 International Seaways 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 International Seaways, you can compare the effects of market volatilities on KNOT Offshore and International Seaways 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 International Seaways. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and International Seaways.
Diversification Opportunities for KNOT Offshore and International Seaways
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between KNOT and International is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways 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 International Seaways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Seaways has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and International Seaways go up and down completely randomly.
Pair Corralation between KNOT Offshore and International Seaways
Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 0.86 times more return on investment than International Seaways. However, KNOT Offshore Partners is 1.16 times less risky than International Seaways. It trades about -0.21 of its potential returns per unit of risk. International Seaways is currently generating about -0.43 per unit of risk. If you would invest 620.00 in KNOT Offshore Partners on September 14, 2024 and sell it today you would lose (42.00) from holding KNOT Offshore Partners or give up 6.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. International Seaways
Performance |
| Timeline |
| KNOT Offshore Partners |
| International Seaways |
KNOT Offshore and International Seaways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and International Seaways
The main advantage of trading using opposite KNOT Offshore and International Seaways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, International Seaways 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 International Seaways will offset losses from the drop in International Seaways' long position.| KNOT Offshore vs. International Seaways | KNOT Offshore vs. Scorpio Tankers | KNOT Offshore vs. Dorian LPG | KNOT Offshore vs. Teekay Tankers |
| International Seaways vs. Teekay Tankers | International Seaways vs. Frontline | International Seaways vs. DHT Holdings | International Seaways vs. Scorpio Tankers |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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