Correlation Between Kellanova and KNOT Offshore

Can any of the company-specific risk be diversified away by investing in both Kellanova 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 Kellanova and KNOT Offshore into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Kellanova and KNOT Offshore Partners, you can compare the effects of market volatilities on Kellanova 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 Kellanova with a short position of KNOT Offshore. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kellanova and KNOT Offshore.

Diversification Opportunities for Kellanova and KNOT Offshore

-0.21

Correlation Coefficient

Kellanova  KNOT Offshore

Very good diversification

The 3 months correlation between Kellanova and KNOT is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Kellanova 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 Kellanova 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 Kellanova 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 Kellanova i.e., Kellanova and KNOT Offshore go up and down completely randomly.

Pair Corralation between Kellanova and KNOT Offshore

Taking into account the 90-day investment horizon Kellanova is expected to generate 1.78 times less return on investment than KNOT Offshore. But when comparing it to its historical volatility, Kellanova is 11.35 times less risky than KNOT Offshore. It trades about 0.3 of its potential returns per unit of risk. KNOT Offshore Partners is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  532.00  in KNOT Offshore Partners on December 19, 2024 and sell it today you would earn a total of  24.00  from holding KNOT Offshore Partners or generate 4.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Kellanova  vs.  KNOT Offshore Partners

Kellanova

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kellanova are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Kellanova is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

KNOT Offshore Partners

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in KNOT Offshore Partners are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, KNOT Offshore is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Kellanova and KNOT Offshore

The main advantage of trading using opposite Kellanova and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kellanova 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 Kellanova 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.