Correlation Between KNOT Offshore and Westinghouse Air
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and Westinghouse Air 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 Westinghouse Air 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 Westinghouse Air Brake, you can compare the effects of market volatilities on KNOT Offshore and Westinghouse Air 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 Westinghouse Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and Westinghouse Air.
Diversification Opportunities for KNOT Offshore and Westinghouse Air
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between KNOT and Westinghouse is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Westinghouse Air Brake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westinghouse Air Brake 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 Westinghouse Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westinghouse Air Brake has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Westinghouse Air go up and down completely randomly.
Pair Corralation between KNOT Offshore and Westinghouse Air
Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Westinghouse Air. In addition to that, KNOT Offshore is 1.32 times more volatile than Westinghouse Air Brake. It trades about -0.01 of its total potential returns per unit of risk. Westinghouse Air Brake is currently generating about 0.25 per unit of volatility. If you would invest 18,861 in Westinghouse Air Brake on September 3, 2024 and sell it today you would earn a total of 1,201 from holding Westinghouse Air Brake or generate 6.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
KNOT Offshore Partners vs. Westinghouse Air Brake
Performance |
| Timeline |
| KNOT Offshore Partners |
| Westinghouse Air Brake |
KNOT Offshore and Westinghouse Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KNOT Offshore and Westinghouse Air
The main advantage of trading using opposite KNOT Offshore and Westinghouse Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Westinghouse Air 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 Westinghouse Air will offset losses from the drop in Westinghouse Air's long position.| KNOT Offshore vs. International Seaways | KNOT Offshore vs. Scorpio Tankers | KNOT Offshore vs. Dorian LPG | KNOT Offshore vs. Teekay Tankers |
| Westinghouse Air vs. Greenbrier Companies | Westinghouse Air vs. LB Foster | Westinghouse Air vs. Freightcar America | Westinghouse Air vs. CSX Corporation |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets |