Correlation Between Epizyme and KNOT Offshore

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

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

Diversification Opportunities for Epizyme and KNOT Offshore

-0.88

Correlation Coefficient

Epizyme  KNOT Offshore

Pay attention - limited upside

The 3 months correlation between Epizyme and KNOT is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Epizyme 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 Epizyme 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 Epizyme 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 Epizyme i.e., Epizyme and KNOT Offshore go up and down completely randomly.

Pair Corralation between Epizyme and KNOT Offshore

If you would invest  147.00  in Epizyme on January 28, 2024 and sell it today you would earn a total of  0.00  from holding Epizyme or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Epizyme  vs.  KNOT Offshore Partners

Epizyme

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Epizyme has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Epizyme is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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 May 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Epizyme and KNOT Offshore

The main advantage of trading using opposite Epizyme and KNOT Offshore positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Epizyme 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 Epizyme 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.