Correlation Between Euronav NV and Frontline

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

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

Diversification Opportunities for Euronav NV and Frontline

-0.47

Correlation Coefficient

Euronav NV  Frontline

Very good diversification

The 3 months correlation between Euronav and Frontline is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Euronav NV and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline and Euronav NV 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 Euronav NV are associated (or correlated) with Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of Euronav NV i.e., Euronav NV and Frontline go up and down completely randomly.

Pair Corralation between Euronav NV and Frontline

If you would invest  1,631  in Euronav NV on September 1, 2024 and sell it today you would earn a total of  0.00  from holding Euronav NV or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	1.59%
Values	Daily Returns

Euronav NV  vs.  Frontline

Euronav NV

Risk-Adjusted Performance

0 of 100

Very Weak

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

Frontline

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frontline 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 basic indicators remain very healthy which may send shares a bit higher in December 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Euronav NV and Frontline

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

The idea behind Euronav NV and Frontline 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.