Correlation Between USA Compression and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both USA Compression 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 USA Compression and KNOT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between USA Compression Partners and KNOT Offshore Partners, you can compare the effects of market volatilities on USA Compression 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 USA Compression with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of USA Compression and KNOT Offshore.
Diversification Opportunities for USA Compression and KNOT Offshore
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between USA and KNOT is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding USA Compression Partners 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 USA Compression 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 USA Compression Partners 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 USA Compression i.e., USA Compression and KNOT Offshore go up and down completely randomly.
Pair Corralation between USA Compression and KNOT Offshore
Given the investment horizon of 90 days USA Compression Partners is expected to generate 0.9 times more return on investment than KNOT Offshore. However, USA Compression Partners is 1.11 times less risky than KNOT Offshore. It trades about 0.21 of its potential returns per unit of risk. KNOT Offshore Partners is currently generating about -0.05 per unit of risk. If you would invest 2,212 in USA Compression Partners on August 27, 2024 and sell it today you would earn a total of 158.00 from holding USA Compression Partners or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
USA Compression Partners vs. KNOT Offshore Partners
Performance |
| Timeline |
| USA Compression Partners |
| KNOT Offshore Partners |
USA Compression and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with USA Compression and KNOT Offshore
The main advantage of trading using opposite USA Compression and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if USA Compression 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.| USA Compression vs. Now Inc | USA Compression vs. Oil States International | USA Compression vs. Oceaneering International | USA Compression vs. Geospace Technologies |
| 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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