Correlation Between CBL International and Teekay

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

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

Diversification Opportunities for CBL International and Teekay

0.68

Correlation Coefficient

CBL International  Teekay

Poor diversification

The 3 months correlation between CBL and Teekay is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding CBL International Limited and Teekay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay and CBL International 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 CBL International Limited are associated (or correlated) with Teekay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teekay has no effect on the direction of CBL International i.e., CBL International and Teekay go up and down completely randomly.

Pair Corralation between CBL International and Teekay

Given the investment horizon of 90 days CBL International Limited is expected to generate 1.75 times more return on investment than Teekay. However, CBL International is 1.75 times more volatile than Teekay. It trades about 0.04 of its potential returns per unit of risk. Teekay is currently generating about 0.06 per unit of risk. If you would invest  102.00  in CBL International Limited on November 28, 2024 and sell it today you would earn a total of  4.00  from holding CBL International Limited or generate 3.92% return on investment over 90 days.

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

CBL International Limited  vs.  Teekay

CBL International

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CBL International Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, CBL International may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Teekay

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teekay are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Teekay may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with CBL International and Teekay

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

The idea behind CBL International Limited and Teekay 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.