Correlation Between KNOT Offshore and Lululemon Athletica
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Lululemon Athletica 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 Lululemon Athletica 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 Lululemon Athletica, you can compare the effects of market volatilities on KNOT Offshore and Lululemon Athletica 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 Lululemon Athletica. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Lululemon Athletica.
Diversification Opportunities for KNOT Offshore and Lululemon Athletica
-0.87 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KNOT and Lululemon is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Lululemon Athletica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lululemon Athletica 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 Lululemon Athletica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lululemon Athletica has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Lululemon Athletica go up and down completely randomly.
Pair Corralation between KNOT Offshore and Lululemon Athletica
Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Lululemon Athletica. But the stock apears to be less risky and, when comparing its historical volatility, KNOT Offshore Partners is 1.51 times less risky than Lululemon Athletica. The stock trades about -0.11 of its potential returns per unit of risk. The Lululemon Athletica is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 25,974 in Lululemon Athletica on August 26, 2024 and sell it today you would earn a total of 5,737 from holding Lululemon Athletica or generate 22.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Lululemon Athletica
Performance |
| Timeline |
| KNOT Offshore Partners |
| Lululemon Athletica |
KNOT Offshore and Lululemon Athletica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Lululemon Athletica
The main advantage of trading using opposite KNOT Offshore and Lululemon Athletica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Lululemon Athletica 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 Lululemon Athletica will offset losses from the drop in Lululemon Athletica'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 |
| Lululemon Athletica vs. American Eagle Outfitters | Lululemon Athletica vs. Abercrombie Fitch | Lululemon Athletica vs. Urban Outfitters | Lululemon Athletica vs. Foot Locker |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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