Correlation Between KNOT Offshore and Coca Cola
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Coca Cola 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 Coca Cola 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 Coca Cola Femsa SAB, you can compare the effects of market volatilities on KNOT Offshore and Coca Cola 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 Coca Cola. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Coca Cola.
Diversification Opportunities for KNOT Offshore and Coca Cola
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KNOT and Coca is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Coca Cola Femsa SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca Cola Femsa 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 Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca Cola Femsa has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Coca Cola go up and down completely randomly.
Pair Corralation between KNOT Offshore and Coca Cola
Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 1.7 times more return on investment than Coca Cola. However, KNOT Offshore is 1.7 times more volatile than Coca Cola Femsa SAB. It trades about 0.03 of its potential returns per unit of risk. Coca Cola Femsa SAB is currently generating about 0.01 per unit of risk. If you would invest 499.00 in KNOT Offshore Partners on August 28, 2024 and sell it today you would earn a total of 103.00 from holding KNOT Offshore Partners or generate 20.64% 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. Coca Cola Femsa SAB
Performance |
| Timeline |
| KNOT Offshore Partners |
| Coca Cola Femsa |
KNOT Offshore and Coca Cola Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Coca Cola
The main advantage of trading using opposite KNOT Offshore and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola'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 |
| Coca Cola vs. Fomento Economico Mexicano | Coca Cola vs. Grupo Televisa SAB | Coca Cola vs. Grupo Aeroportuario del | Coca Cola vs. Grupo Aeroportuario del |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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