Correlation Between KNOT Offshore and Toro
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Toro 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 Toro 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 Toro, you can compare the effects of market volatilities on KNOT Offshore and Toro 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 Toro. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Toro.
Diversification Opportunities for KNOT Offshore and Toro
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between KNOT and Toro is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Toro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Toro 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 Toro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Toro has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Toro go up and down completely randomly.
Pair Corralation between KNOT Offshore and Toro
Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 0.52 times more return on investment than Toro. However, KNOT Offshore Partners is 1.92 times less risky than Toro. It trades about -0.05 of its potential returns per unit of risk. Toro is currently generating about -0.27 per unit of risk. If you would invest 610.00 in KNOT Offshore Partners on August 30, 2024 and sell it today you would lose (14.00) from holding KNOT Offshore Partners or give up 2.3% 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. Toro
Performance |
| Timeline |
| KNOT Offshore Partners |
| Toro |
KNOT Offshore and Toro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Toro
The main advantage of trading using opposite KNOT Offshore and Toro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Toro 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 Toro will offset losses from the drop in Toro's long position.| KNOT Offshore vs. Danaos | KNOT Offshore vs. Global Ship Lease | KNOT Offshore vs. Euroseas | KNOT Offshore vs. Navios Maritime Partners |
| Toro vs. Seanergy Maritime Holdings | Toro vs. Globus Maritime | Toro vs. TOP Ships | Toro vs. Diana Shipping |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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