Correlation Between Safe Bulkers and Energy Transfer

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

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

Diversification Opportunities for Safe Bulkers and Energy Transfer

-0.8

Correlation Coefficient

Safe Bulkers  Energy Transfer

Pay attention - limited upside

The 3 months correlation between Safe and Energy is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and Energy Transfer LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Transfer LP and Safe Bulkers 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 Safe Bulkers are associated (or correlated) with Energy Transfer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Transfer LP has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and Energy Transfer go up and down completely randomly.

Pair Corralation between Safe Bulkers and Energy Transfer

Allowing for the 90-day total investment horizon Safe Bulkers is expected to under-perform the Energy Transfer. In addition to that, Safe Bulkers is 1.14 times more volatile than Energy Transfer LP. It trades about -0.39 of its total potential returns per unit of risk. Energy Transfer LP is currently generating about -0.01 per unit of volatility. If you would invest  1,897  in Energy Transfer LP on September 24, 2024 and sell it today you would lose (11.00) from holding Energy Transfer LP or give up 0.58% of portfolio value over 90 days.

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

Safe Bulkers  vs.  Energy Transfer LP

Safe Bulkers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safe Bulkers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Energy Transfer LP

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Energy Transfer LP are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Energy Transfer unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Safe Bulkers and Energy Transfer

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

The idea behind Safe Bulkers and Energy Transfer LP 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.