Correlation Between KNOT Offshore and 63633DAF1

Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and 63633DAF1 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 63633DAF1 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 NHI 3 01 FEB 31, you can compare the effects of market volatilities on KNOT Offshore and 63633DAF1 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 63633DAF1. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and 63633DAF1.

Diversification Opportunities for KNOT Offshore and 63633DAF1

0.59

Correlation Coefficient

KNOT Offshore  63633DAF1

Very weak diversification

The 3 months correlation between KNOT and 63633DAF1 is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and NHI 3 01 FEB 31 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 63633DAF1 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 63633DAF1. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 63633DAF1 has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and 63633DAF1 go up and down completely randomly.

Pair Corralation between KNOT Offshore and 63633DAF1

Given the investment horizon of 90 days KNOT Offshore Partners is expected to under-perform the 63633DAF1. In addition to that, KNOT Offshore is 1.65 times more volatile than NHI 3 01 FEB 31. It trades about -0.17 of its total potential returns per unit of risk. NHI 3 01 FEB 31 is currently generating about -0.13 per unit of volatility. If you would invest  8,768  in NHI 3 01 FEB 31 on September 13, 2024 and sell it today you would lose (625.00) from holding NHI 3 01 FEB 31 or give up 7.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	92.19%
Values	Daily Returns

KNOT Offshore Partners  vs.  NHI 3 01 FEB 31

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 unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

63633DAF1

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NHI 3 01 FEB 31 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for NHI 3 01 FEB 31 investors.

Pair Trading with KNOT Offshore and 63633DAF1

The main advantage of trading using opposite KNOT Offshore and 63633DAF1 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, 63633DAF1 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 63633DAF1 will offset losses from the drop in 63633DAF1's long position.

The idea behind KNOT Offshore Partners and NHI 3 01 FEB 31 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.