Correlation Between Global Partners and Pyxis Tankers

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

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

Diversification Opportunities for Global Partners and Pyxis Tankers

-0.71

Correlation Coefficient

Global Partners  Pyxis Tankers

Pay attention - limited upside

The 3 months correlation between Global and Pyxis is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Global Partners LP and Pyxis Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyxis Tankers and Global Partners 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 Partners LP are associated (or correlated) with Pyxis Tankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyxis Tankers has no effect on the direction of Global Partners i.e., Global Partners and Pyxis Tankers go up and down completely randomly.

Pair Corralation between Global Partners and Pyxis Tankers

Considering the 90-day investment horizon Global Partners LP is expected to generate 0.17 times more return on investment than Pyxis Tankers. However, Global Partners LP is 6.0 times less risky than Pyxis Tankers. It trades about 0.26 of its potential returns per unit of risk. Pyxis Tankers is currently generating about -0.07 per unit of risk. If you would invest  4,132  in Global Partners LP on September 2, 2024 and sell it today you would earn a total of  1,513  from holding Global Partners LP or generate 36.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	60.94%
Values	Daily Returns

Global Partners LP  vs.  Pyxis Tankers

Global Partners LP

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Global Partners reported solid returns over the last few months and may actually be approaching a breakup point.

Pyxis Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pyxis Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Global Partners and Pyxis Tankers

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

The idea behind Global Partners LP and Pyxis Tankers 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.