Correlation Between KNOT Offshore and Mach Natural
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Mach Natural 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 Mach Natural 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 Mach Natural Resources, you can compare the effects of market volatilities on KNOT Offshore and Mach Natural 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 Mach Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Mach Natural.
Diversification Opportunities for KNOT Offshore and Mach Natural
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between KNOT and Mach is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Mach Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mach Natural Resources 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 Mach Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mach Natural Resources has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Mach Natural go up and down completely randomly.
Pair Corralation between KNOT Offshore and Mach Natural
Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 1.65 times more return on investment than Mach Natural. However, KNOT Offshore is 1.65 times more volatile than Mach Natural Resources. It trades about 0.16 of its potential returns per unit of risk. Mach Natural Resources is currently generating about -0.02 per unit of risk. If you would invest 565.00 in KNOT Offshore Partners on January 7, 2025 and sell it today you would earn a total of 85.00 from holding KNOT Offshore Partners or generate 15.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Mach Natural Resources
Performance |
| Timeline |
| KNOT Offshore Partners |
| Mach Natural Resources |
KNOT Offshore and Mach Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Mach Natural
The main advantage of trading using opposite KNOT Offshore and Mach Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Mach Natural 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 Mach Natural will offset losses from the drop in Mach Natural'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 |
| Mach Natural vs. Kraft Heinz Co | Mach Natural vs. Tarsus Pharmaceuticals | Mach Natural vs. BioNTech SE | Mach Natural vs. BBB Foods |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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