Correlation Between KNOT Offshore and Tyson Foods
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Tyson Foods 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 Tyson Foods 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 Tyson Foods, you can compare the effects of market volatilities on KNOT Offshore and Tyson Foods 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 Tyson Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Tyson Foods.
Diversification Opportunities for KNOT Offshore and Tyson Foods
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between KNOT and Tyson is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Tyson Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tyson Foods 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 Tyson Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tyson Foods has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Tyson Foods go up and down completely randomly.
Pair Corralation between KNOT Offshore and Tyson Foods
Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Tyson Foods. In addition to that, KNOT Offshore is 1.06 times more volatile than Tyson Foods. It trades about -0.08 of its total potential returns per unit of risk. Tyson Foods is currently generating about 0.21 per unit of volatility. If you would invest 5,920 in Tyson Foods on August 28, 2024 and sell it today you would earn a total of 461.00 from holding Tyson Foods or generate 7.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Tyson Foods
Performance |
| Timeline |
| KNOT Offshore Partners |
| Tyson Foods |
KNOT Offshore and Tyson Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Tyson Foods
The main advantage of trading using opposite KNOT Offshore and Tyson Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Tyson Foods 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 Tyson Foods will offset losses from the drop in Tyson Foods' 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 |
| Tyson Foods vs. Bellring Brands LLC | Tyson Foods vs. Ingredion Incorporated | Tyson Foods vs. Nomad Foods | Tyson Foods vs. Simply Good Foods |
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 Stocks Directory module to find actively traded stocks across global markets.
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