Correlation Between KNOT Offshore and United Parks
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and United Parks 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 United Parks 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 United Parks Resorts, you can compare the effects of market volatilities on KNOT Offshore and United Parks 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 United Parks. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and United Parks.
Diversification Opportunities for KNOT Offshore and United Parks
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between KNOT and United is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and United Parks Resorts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Parks Resorts 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 United Parks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Parks Resorts has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and United Parks go up and down completely randomly.
Pair Corralation between KNOT Offshore and United Parks
Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 1.21 times more return on investment than United Parks. However, KNOT Offshore is 1.21 times more volatile than United Parks Resorts. It trades about -0.14 of its potential returns per unit of risk. United Parks Resorts is currently generating about -0.25 per unit of risk. If you would invest 586.00 in KNOT Offshore Partners on November 3, 2024 and sell it today you would lose (36.00) from holding KNOT Offshore Partners or give up 6.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. United Parks Resorts
Performance |
| Timeline |
| KNOT Offshore Partners |
| United Parks Resorts |
KNOT Offshore and United Parks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and United Parks
The main advantage of trading using opposite KNOT Offshore and United Parks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, United Parks 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 United Parks will offset losses from the drop in United Parks' 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 |
| United Parks vs. Alto Neuroscience, | United Parks vs. Valneva SE ADR | United Parks vs. Regeneron Pharmaceuticals | United Parks vs. Sea |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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