Correlation Between KNOT Offshore and Pekin Life
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Pekin Life 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 Pekin Life 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 Pekin Life Insurance, you can compare the effects of market volatilities on KNOT Offshore and Pekin Life 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 Pekin Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Pekin Life.
Diversification Opportunities for KNOT Offshore and Pekin Life
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KNOT and Pekin is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Pekin Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pekin Life Insurance 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 Pekin Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pekin Life Insurance has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Pekin Life go up and down completely randomly.
Pair Corralation between KNOT Offshore and Pekin Life
Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 12.48 times more return on investment than Pekin Life. However, KNOT Offshore is 12.48 times more volatile than Pekin Life Insurance. It trades about 0.01 of its potential returns per unit of risk. Pekin Life Insurance is currently generating about 0.04 per unit of risk. If you would invest 565.00 in KNOT Offshore Partners on November 3, 2024 and sell it today you would lose (15.00) from holding KNOT Offshore Partners or give up 2.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Pekin Life Insurance
Performance |
| Timeline |
| KNOT Offshore Partners |
| Pekin Life Insurance |
KNOT Offshore and Pekin Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Pekin Life
The main advantage of trading using opposite KNOT Offshore and Pekin Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Pekin Life 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 Pekin Life will offset losses from the drop in Pekin Life'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 |
| Pekin Life vs. FG Annuities Life | Pekin Life vs. MetLife Preferred Stock | Pekin Life vs. Brighthouse Financial | Pekin Life vs. MetLife Preferred Stock |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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