Correlation Between KNOT Offshore and Joint Corp
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Joint Corp 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 Joint Corp 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 The Joint Corp, you can compare the effects of market volatilities on KNOT Offshore and Joint Corp 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 Joint Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Joint Corp.
Diversification Opportunities for KNOT Offshore and Joint Corp
-0.22 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KNOT and Joint is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and The Joint Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Joint Corp 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 Joint Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Joint Corp has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Joint Corp go up and down completely randomly.
Pair Corralation between KNOT Offshore and Joint Corp
Given the investment horizon of 90 days KNOT Offshore is expected to generate 7.93 times less return on investment than Joint Corp. But when comparing it to its historical volatility, KNOT Offshore Partners is 1.88 times less risky than Joint Corp. It trades about 0.02 of its potential returns per unit of risk. The Joint Corp is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,110 in The Joint Corp on September 5, 2024 and sell it today you would earn a total of 45.00 from holding The Joint Corp or generate 4.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. The Joint Corp
Performance |
| Timeline |
| KNOT Offshore Partners |
| Joint Corp |
KNOT Offshore and Joint Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Joint Corp
The main advantage of trading using opposite KNOT Offshore and Joint Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Joint Corp 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 Joint Corp will offset losses from the drop in Joint Corp'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 |
| Joint Corp vs. Encompass Health Corp | Joint Corp vs. Pennant Group | Joint Corp vs. Enhabit | Joint Corp vs. ModivCare |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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