Correlation Between KNOT Offshore and Nextplat Corp
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Nextplat Corp 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 Nextplat Corp 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 Nextplat Corp, you can compare the effects of market volatilities on KNOT Offshore and Nextplat Corp 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 Nextplat Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Nextplat Corp.
Diversification Opportunities for KNOT Offshore and Nextplat Corp
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KNOT and Nextplat is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Nextplat Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nextplat Corp 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 Nextplat Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nextplat Corp has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Nextplat Corp go up and down completely randomly.
Pair Corralation between KNOT Offshore and Nextplat Corp
Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Nextplat Corp. But the stock apears to be less risky and, when comparing its historical volatility, KNOT Offshore Partners is 1.63 times less risky than Nextplat Corp. The stock trades about -0.01 of its potential returns per unit of risk. The Nextplat Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 155.00 in Nextplat Corp on August 30, 2024 and sell it today you would lose (70.00) from holding Nextplat Corp or give up 45.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Nextplat Corp
Performance |
| Timeline |
| KNOT Offshore Partners |
| Nextplat Corp |
KNOT Offshore and Nextplat Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Nextplat Corp
The main advantage of trading using opposite KNOT Offshore and Nextplat Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Nextplat Corp 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 Nextplat Corp will offset losses from the drop in Nextplat Corp's long position.| KNOT Offshore vs. Danaos | KNOT Offshore vs. Global Ship Lease | KNOT Offshore vs. Euroseas | KNOT Offshore vs. Navios Maritime Partners |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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