Correlation Between KNOT Offshore and Bellevue Life

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

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

Diversification Opportunities for KNOT Offshore and Bellevue Life

-0.23

Correlation Coefficient

KNOT Offshore  Bellevue Life

Very good diversification

The 3 months correlation between KNOT and Bellevue is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and Bellevue Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bellevue Life Sciences and KNOT Offshore 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 KNOT Offshore Partners are associated (or correlated) with Bellevue Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bellevue Life Sciences has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and Bellevue Life go up and down completely randomly.

Pair Corralation between KNOT Offshore and Bellevue Life

Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the Bellevue Life. But the stock apears to be less risky and, when comparing its historical volatility, KNOT Offshore Partners is 1.01 times less risky than Bellevue Life. The stock trades about -0.05 of its potential returns per unit of risk. The Bellevue Life Sciences is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,095  in Bellevue Life Sciences on October 25, 2024 and sell it today you would earn a total of  36.00  from holding Bellevue Life Sciences or generate 3.29% return on investment over 90 days.

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

KNOT Offshore Partners  vs.  Bellevue Life Sciences

KNOT Offshore Partners

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KNOT Offshore Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unsteady performance, the Stock's basic indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Bellevue Life Sciences

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bellevue Life Sciences are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Bellevue Life is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with KNOT Offshore and Bellevue Life

The main advantage of trading using opposite KNOT Offshore and Bellevue Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, Bellevue Life 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 Bellevue Life will offset losses from the drop in Bellevue Life's long position.

The idea behind KNOT Offshore Partners and Bellevue Life Sciences 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.