Correlation Between International Seaways and DT Midstream

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

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

Diversification Opportunities for International Seaways and DT Midstream

0.47

Correlation Coefficient

International Seaways  DT Midstream

Very weak diversification

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

Pair Corralation between International Seaways and DT Midstream

Given the investment horizon of 90 days International Seaways is expected to under-perform the DT Midstream. In addition to that, International Seaways is 1.59 times more volatile than DT Midstream. It trades about -0.28 of its total potential returns per unit of risk. DT Midstream is currently generating about -0.44 per unit of volatility. If you would invest  10,158  in DT Midstream on December 10, 2024 and sell it today you would lose (1,463) from holding DT Midstream or give up 14.4% of portfolio value over 90 days.

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

International Seaways  vs.  DT Midstream

International Seaways

Risk-Adjusted Performance

Very Weak

Over the last 90 days International Seaways has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, International Seaways is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

DT Midstream

Risk-Adjusted Performance

Very Weak

Over the last 90 days DT Midstream has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with International Seaways and DT Midstream

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

The idea behind International Seaways and DT Midstream 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.