Correlation Between KNOT Offshore and NETGEAR
Can any of the company-specific risk be diversified away by investing in both KNOT Offshore and NETGEAR 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 NETGEAR 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 NETGEAR, you can compare the effects of market volatilities on KNOT Offshore and NETGEAR 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 NETGEAR. Check out your portfolio center. Please also check ongoing floating volatility patterns of KNOT Offshore and NETGEAR.
Diversification Opportunities for KNOT Offshore and NETGEAR
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KNOT and NETGEAR is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding KNOT Offshore Partners and NETGEAR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NETGEAR 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 NETGEAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NETGEAR has no effect on the direction of KNOT Offshore i.e., KNOT Offshore and NETGEAR go up and down completely randomly.
Pair Corralation between KNOT Offshore and NETGEAR
Given the investment horizon of 90 days KNOT Offshore Partners is expected to generate 0.46 times more return on investment than NETGEAR. However, KNOT Offshore Partners is 2.19 times less risky than NETGEAR. It trades about 0.07 of its potential returns per unit of risk. NETGEAR is currently generating about -0.23 per unit of risk. If you would invest 526.00 in KNOT Offshore Partners on February 4, 2024 and sell it today you would earn a total of 15.00 from holding KNOT Offshore Partners or generate 2.85% 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. NETGEAR
Performance |
Timeline |
KNOT Offshore Partners |
NETGEAR |
KNOT Offshore and NETGEAR Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with KNOT Offshore and NETGEAR
The main advantage of trading using opposite KNOT Offshore and NETGEAR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KNOT Offshore position performs unexpectedly, NETGEAR 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 NETGEAR will offset losses from the drop in NETGEAR's long position.KNOT Offshore vs. Danaos | KNOT Offshore vs. Global Ship Lease | KNOT Offshore vs. Euroseas | KNOT Offshore vs. Navios Maritime Partners |
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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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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