Correlation Between Safe Bulkers and Teekay

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

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

Diversification Opportunities for Safe Bulkers and Teekay

0.39

Correlation Coefficient

Safe Bulkers  Teekay

Weak diversification

The 3 months correlation between Safe and Teekay is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and Teekay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay 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 Teekay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teekay has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and Teekay go up and down completely randomly.

Pair Corralation between Safe Bulkers and Teekay

Allowing for the 90-day total investment horizon Safe Bulkers is expected to under-perform the Teekay. But the stock apears to be less risky and, when comparing its historical volatility, Safe Bulkers is 1.09 times less risky than Teekay. The stock trades about -0.09 of its potential returns per unit of risk. The Teekay is currently generating about 0.41 of returns per unit of risk over similar time horizon. If you would invest  632.00  in Teekay on October 14, 2024 and sell it today you would earn a total of  118.00  from holding Teekay or generate 18.67% return on investment over 90 days.

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

Safe Bulkers  vs.  Teekay

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 conflicting performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Teekay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teekay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Teekay is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Safe Bulkers and Teekay

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

The idea behind Safe Bulkers and Teekay 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.