Correlation Between Sable Offshore and KNOT Offshore

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

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

Diversification Opportunities for Sable Offshore and KNOT Offshore

0.41

Correlation Coefficient

Sable Offshore  KNOT Offshore

Very weak diversification

The 3 months correlation between Sable and KNOT is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Sable Offshore Corp 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 Sable 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 Sable Offshore Corp 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 Sable Offshore i.e., Sable Offshore and KNOT Offshore go up and down completely randomly.

Pair Corralation between Sable Offshore and KNOT Offshore

Considering the 90-day investment horizon Sable Offshore Corp is expected to generate 3.03 times more return on investment than KNOT Offshore. However, Sable Offshore is 3.03 times more volatile than KNOT Offshore Partners. It trades about -0.01 of its potential returns per unit of risk. KNOT Offshore Partners is currently generating about -0.39 per unit of risk. If you would invest  2,159  in Sable Offshore Corp on September 19, 2024 and sell it today you would lose (67.00) from holding Sable Offshore Corp or give up 3.1% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Sable Offshore Corp  vs.  KNOT Offshore Partners

Sable Offshore Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sable Offshore Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

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.

Pair Trading with Sable Offshore and KNOT Offshore

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

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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.