Correlation Between Sonida Senior and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both Sonida Senior 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 Sonida Senior and KNOT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sonida Senior Living and KNOT Offshore Partners, you can compare the effects of market volatilities on Sonida Senior 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 Sonida Senior with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sonida Senior and KNOT Offshore.
Diversification Opportunities for Sonida Senior and KNOT Offshore
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sonida and KNOT is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Sonida Senior Living 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 Sonida Senior 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 Sonida Senior Living 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 Sonida Senior i.e., Sonida Senior and KNOT Offshore go up and down completely randomly.
Pair Corralation between Sonida Senior and KNOT Offshore
Given the investment horizon of 90 days Sonida Senior Living is expected to under-perform the KNOT Offshore. In addition to that, Sonida Senior is 1.35 times more volatile than KNOT Offshore Partners. It trades about -0.02 of its total potential returns per unit of risk. KNOT Offshore Partners is currently generating about 0.04 per unit of volatility. If you would invest 516.00 in KNOT Offshore Partners on September 3, 2024 and sell it today you would earn a total of 67.00 from holding KNOT Offshore Partners or generate 12.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sonida Senior Living vs. KNOT Offshore Partners
Performance |
| Timeline |
| Sonida Senior Living |
| KNOT Offshore Partners |
Sonida Senior and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sonida Senior and KNOT Offshore
The main advantage of trading using opposite Sonida Senior and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sonida Senior 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.| Sonida Senior vs. Select Medical Holdings | Sonida Senior vs. Encompass Health Corp | Sonida Senior vs. Pennant Group | Sonida Senior vs. InnovAge Holding Corp |
| KNOT Offshore vs. International Seaways | KNOT Offshore vs. Scorpio Tankers | KNOT Offshore vs. Dorian LPG | KNOT Offshore vs. Teekay Tankers |
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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