Correlation Between KNOT Offshore and Koppers Holdings
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Koppers Holdings 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 Koppers Holdings 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 Koppers Holdings, you can compare the effects of market volatilities on KNOT Offshore and Koppers Holdings 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 Koppers Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Koppers Holdings.
Diversification Opportunities for KNOT Offshore and Koppers Holdings
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KNOT and Koppers is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Koppers Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Koppers Holdings 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 Koppers Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Koppers Holdings has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Koppers Holdings go up and down completely randomly.
Pair Corralation between KNOT Offshore and Koppers Holdings
Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 1.17 times more return on investment than Koppers Holdings. However, KNOT Offshore is 1.17 times more volatile than Koppers Holdings. It trades about 0.03 of its potential returns per unit of risk. Koppers Holdings is currently generating about 0.03 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Koppers Holdings
Performance |
| Timeline |
| KNOT Offshore Partners |
| Koppers Holdings |
KNOT Offshore and Koppers Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Koppers Holdings
The main advantage of trading using opposite KNOT Offshore and Koppers Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Koppers Holdings 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 Koppers Holdings will offset losses from the drop in Koppers Holdings' 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 |
| Koppers Holdings vs. Quaker Chemical | Koppers Holdings vs. Minerals Technologies | Koppers Holdings vs. Innospec | Koppers Holdings vs. H B Fuller |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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