Correlation Between KNOT Offshore and Teleflex Incorporated
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Teleflex Incorporated 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 Teleflex Incorporated 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 Teleflex Incorporated, you can compare the effects of market volatilities on KNOT Offshore and Teleflex Incorporated 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 Teleflex Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Teleflex Incorporated.
Diversification Opportunities for KNOT Offshore and Teleflex Incorporated
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KNOT and Teleflex is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated 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 Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Teleflex Incorporated go up and down completely randomly.
Pair Corralation between KNOT Offshore and Teleflex Incorporated
Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 1.42 times more return on investment than Teleflex Incorporated. However, KNOT Offshore is 1.42 times more volatile than Teleflex Incorporated. It trades about 0.03 of its potential returns per unit of risk. Teleflex Incorporated is currently generating about -0.03 per unit of risk. If you would invest 538.00 in KNOT Offshore Partners on September 5, 2024 and sell it today you would earn a total of 51.00 from holding KNOT Offshore Partners or generate 9.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Teleflex Incorporated
Performance |
| Timeline |
| KNOT Offshore Partners |
| Teleflex Incorporated |
KNOT Offshore and Teleflex Incorporated Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Teleflex Incorporated
The main advantage of trading using opposite KNOT Offshore and Teleflex Incorporated positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Teleflex Incorporated 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 Teleflex Incorporated will offset losses from the drop in Teleflex Incorporated'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 |
| Teleflex Incorporated vs. Baxter International | Teleflex Incorporated vs. West Pharmaceutical Services | Teleflex Incorporated vs. ResMed Inc | Teleflex Incorporated vs. ICU Medical |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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