Correlation Between United States and KNOT Offshore
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and KNOT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and KNOT Offshore Partners, you can compare the effects of market volatilities on United States 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 United States with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and KNOT Offshore.
Diversification Opportunities for United States and KNOT Offshore
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between United and KNOT is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and KNOT Offshore go up and down completely randomly.
Pair Corralation between United States and KNOT Offshore
Taking into account the 90-day investment horizon United States Steel is expected to generate 1.87 times more return on investment than KNOT Offshore. However, United States is 1.87 times more volatile than KNOT Offshore Partners. It trades about 0.06 of its potential returns per unit of risk. KNOT Offshore Partners is currently generating about -0.08 per unit of risk. If you would invest 3,838 in United States Steel on August 28, 2024 and sell it today you would earn a total of 125.00 from holding United States Steel or generate 3.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. KNOT Offshore Partners
Performance |
| Timeline |
| United States Steel |
| KNOT Offshore Partners |
United States and KNOT Offshore Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and KNOT Offshore
The main advantage of trading using opposite United States and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.The idea behind United States Steel and KNOT Offshore Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 CEOs Directory module to screen CEOs from public companies around the world.
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