Correlation Between DHT Holdings and Global Partners

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

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

Diversification Opportunities for DHT Holdings and Global Partners

-0.57

Correlation Coefficient

DHT Holdings  Global Partners

Excellent diversification

The 3 months correlation between DHT and Global is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding DHT Holdings and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP and DHT Holdings 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 DHT Holdings are associated (or correlated) with Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of DHT Holdings i.e., DHT Holdings and Global Partners go up and down completely randomly.

Pair Corralation between DHT Holdings and Global Partners

Considering the 90-day investment horizon DHT Holdings is expected to generate 0.84 times more return on investment than Global Partners. However, DHT Holdings is 1.19 times less risky than Global Partners. It trades about -0.06 of its potential returns per unit of risk. Global Partners LP is currently generating about -0.21 per unit of risk. If you would invest  976.00  in DHT Holdings on September 27, 2024 and sell it today you would lose (31.00) from holding DHT Holdings or give up 3.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

DHT Holdings  vs.  Global Partners LP

DHT Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DHT Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's technical indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Global Partners LP

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Global Partners may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with DHT Holdings and Global Partners

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

The idea behind DHT Holdings and Global Partners LP 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.