Correlation Between KNOT Offshore and Nike
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on KNOT Offshore and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Nike.
Diversification Opportunities for KNOT Offshore and Nike
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KNOT and Nike is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Nike go up and down completely randomly.
Pair Corralation between KNOT Offshore and Nike
Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Nike. In addition to that, KNOT Offshore is 1.05 times more volatile than Nike Inc. It trades about -0.09 of its total potential returns per unit of risk. Nike Inc is currently generating about 0.03 per unit of volatility. If you would invest 7,806 in Nike Inc on September 2, 2024 and sell it today you would earn a total of 71.00 from holding Nike Inc or generate 0.91% 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. Nike Inc
Performance |
| Timeline |
| KNOT Offshore Partners |
| Nike Inc |
KNOT Offshore and Nike Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Nike
The main advantage of trading using opposite KNOT Offshore and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike'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 |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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