Correlation Between KNOT Offshore and Nasdaq
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Nasdaq 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 Nasdaq 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 Nasdaq Inc, you can compare the effects of market volatilities on KNOT Offshore and Nasdaq 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 Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Nasdaq.
Diversification Opportunities for KNOT Offshore and Nasdaq
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KNOT and Nasdaq is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc 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 Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Nasdaq go up and down completely randomly.
Pair Corralation between KNOT Offshore and Nasdaq
Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Nasdaq. In addition to that, KNOT Offshore is 1.86 times more volatile than Nasdaq Inc. It trades about -0.22 of its total potential returns per unit of risk. Nasdaq Inc is currently generating about 0.24 per unit of volatility. If you would invest 7,115 in Nasdaq Inc on September 3, 2024 and sell it today you would earn a total of 1,184 from holding Nasdaq Inc or generate 16.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Nasdaq Inc
Performance |
| Timeline |
| KNOT Offshore Partners |
| Nasdaq Inc |
KNOT Offshore and Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Nasdaq
The main advantage of trading using opposite KNOT Offshore and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Nasdaq 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 Nasdaq will offset losses from the drop in Nasdaq's long position.| KNOT Offshore vs. International Seaways | KNOT Offshore vs. Scorpio Tankers | KNOT Offshore vs. Dorian LPG | KNOT Offshore vs. Teekay Tankers |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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