Correlation Between Global E and Tsakos Energy

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

By analyzing existing cross correlation between Global E Online and Tsakos Energy Navigation, you can compare the effects of market volatilities on Global E and Tsakos Energy 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 Global E with a short position of Tsakos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global E and Tsakos Energy.

Diversification Opportunities for Global E and Tsakos Energy

-0.79

Correlation Coefficient

Global E  Tsakos Energy

Pay attention - limited upside

The 3 months correlation between Global and Tsakos is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Global E Online and Tsakos Energy Navigation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsakos Energy Navigation and Global E 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 Global E Online are associated (or correlated) with Tsakos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsakos Energy Navigation has no effect on the direction of Global E i.e., Global E and Tsakos Energy go up and down completely randomly.

Pair Corralation between Global E and Tsakos Energy

Given the investment horizon of 90 days Global E Online is expected to under-perform the Tsakos Energy. But the stock apears to be less risky and, when comparing its historical volatility, Global E Online is 1.37 times less risky than Tsakos Energy. The stock trades about -0.06 of its potential returns per unit of risk. The Tsakos Energy Navigation is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,780  in Tsakos Energy Navigation on October 10, 2024 and sell it today you would earn a total of  26.00  from holding Tsakos Energy Navigation or generate 1.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Global E Online  vs.  Tsakos Energy Navigation

Global E Online

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global E Online are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent fundamental drivers, Global E exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tsakos Energy Navigation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsakos Energy Navigation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Global E and Tsakos Energy

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

The idea behind Global E Online and Tsakos Energy Navigation 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.

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 Global Correlations module to find global opportunities by holding instruments from different markets.