Correlation Between Overseas Shipholding and Teekay Tankers

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

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

Diversification Opportunities for Overseas Shipholding and Teekay Tankers

-0.9

Correlation Coefficient

Overseas Shipholding  Teekay Tankers

Pay attention - limited upside

The 3 months correlation between Overseas and Teekay is -0.9. Overlapping area represents the amount of risk that can be diversified away by holding Overseas Shipholding Group and Teekay Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay Tankers and Overseas Shipholding 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 Overseas Shipholding Group are associated (or correlated) with Teekay Tankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teekay Tankers has no effect on the direction of Overseas Shipholding i.e., Overseas Shipholding and Teekay Tankers go up and down completely randomly.

Pair Corralation between Overseas Shipholding and Teekay Tankers

If you would invest  849.00  in Overseas Shipholding Group on October 4, 2024 and sell it today you would earn a total of  0.00  from holding Overseas Shipholding Group or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	4.76%
Values	Daily Returns

Overseas Shipholding Group  vs.  Teekay Tankers

Overseas Shipholding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Overseas Shipholding Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Overseas Shipholding is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Teekay Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teekay Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Overseas Shipholding and Teekay Tankers

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

The idea behind Overseas Shipholding Group and Teekay 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.