Correlation Between Mill City and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both Mill City and KNOT Offshore 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 Mill City and KNOT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mill City Ventures and KNOT Offshore Partners, you can compare the effects of market volatilities on Mill City and KNOT Offshore 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 Mill City with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mill City and KNOT Offshore.
Diversification Opportunities for Mill City and KNOT Offshore
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mill and KNOT is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mill City Ventures and KNOT Offshore Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KNOT Offshore Partners and Mill City 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 Mill City Ventures are associated (or correlated) with KNOT Offshore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KNOT Offshore Partners has no effect on the direction of Mill City i.e., Mill City and KNOT Offshore go up and down completely randomly.
Pair Corralation between Mill City and KNOT Offshore
Given the investment horizon of 90 days Mill City Ventures is expected to generate 2.31 times more return on investment than KNOT Offshore. However, Mill City is 2.31 times more volatile than KNOT Offshore Partners. It trades about -0.03 of its potential returns per unit of risk. KNOT Offshore Partners is currently generating about -0.09 per unit of risk. If you would invest 206.00 in Mill City Ventures on September 2, 2024 and sell it today you would lose (8.00) from holding Mill City Ventures or give up 3.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mill City Ventures vs. KNOT Offshore Partners
Performance |
| Timeline |
| Mill City Ventures |
| KNOT Offshore Partners |
Mill City and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mill City and KNOT Offshore
The main advantage of trading using opposite Mill City and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mill City position performs unexpectedly, KNOT Offshore 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 KNOT Offshore will offset losses from the drop in KNOT Offshore's long position.| Mill City vs. Consumer Portfolio Services | Mill City vs. Atlanticus Holdings Corp | Mill City vs. Nelnet Inc | Mill City vs. Senmiao Technology |
| KNOT Offshore vs. USA Compression Partners | KNOT Offshore vs. Dynagas LNG Partners | KNOT Offshore vs. Crossamerica Partners LP | KNOT Offshore vs. Delek Logistics Partners |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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