Correlation Between KNOT Offshore and Vodka Brands
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Vodka Brands 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 Vodka Brands 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 Vodka Brands Corp, you can compare the effects of market volatilities on KNOT Offshore and Vodka Brands 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 Vodka Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Vodka Brands.
Diversification Opportunities for KNOT Offshore and Vodka Brands
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between KNOT and Vodka is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Vodka Brands Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vodka Brands Corp 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 Vodka Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vodka Brands Corp has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Vodka Brands go up and down completely randomly.
Pair Corralation between KNOT Offshore and Vodka Brands
Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Vodka Brands. But the stock apears to be less risky and, when comparing its historical volatility, KNOT Offshore Partners is 2.89 times less risky than Vodka Brands. The stock trades about -0.2 of its potential returns per unit of risk. The Vodka Brands Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 110.00 in Vodka Brands Corp on August 30, 2024 and sell it today you would earn a total of 2.00 from holding Vodka Brands Corp or generate 1.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Vodka Brands Corp
Performance |
| Timeline |
| KNOT Offshore Partners |
| Vodka Brands Corp |
KNOT Offshore and Vodka Brands Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Vodka Brands
The main advantage of trading using opposite KNOT Offshore and Vodka Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Vodka Brands 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 Vodka Brands will offset losses from the drop in Vodka Brands' long position.| KNOT Offshore vs. Danaos | KNOT Offshore vs. Global Ship Lease | KNOT Offshore vs. Euroseas | KNOT Offshore vs. Navios Maritime Partners |
| Vodka Brands vs. Aristocrat Group Corp | Vodka Brands vs. Naked Wines plc | Vodka Brands vs. Willamette Valley Vineyards | Vodka Brands vs. Andrew Peller Limited |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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