Correlation Between Scorpio Tankers and Nordic American
Can any of the company-specific risk be diversified away by investing in both Scorpio Tankers and Nordic American 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 Scorpio Tankers and Nordic American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scorpio Tankers and Nordic American Tankers, you can compare the effects of market volatilities on Scorpio Tankers and Nordic American 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 Scorpio Tankers with a short position of Nordic American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scorpio Tankers and Nordic American.
Diversification Opportunities for Scorpio Tankers and Nordic American
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Scorpio and Nordic is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Scorpio Tankers and Nordic American Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic American Tankers and Scorpio Tankers 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 Scorpio Tankers are associated (or correlated) with Nordic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic American Tankers has no effect on the direction of Scorpio Tankers i.e., Scorpio Tankers and Nordic American go up and down completely randomly.
Pair Corralation between Scorpio Tankers and Nordic American
Given the investment horizon of 90 days Scorpio Tankers is expected to under-perform the Nordic American. In addition to that, Scorpio Tankers is 1.24 times more volatile than Nordic American Tankers. It trades about -0.12 of its total potential returns per unit of risk. Nordic American Tankers is currently generating about 0.05 per unit of volatility. If you would invest 239.00 in Nordic American Tankers on December 28, 2024 and sell it today you would earn a total of 14.00 from holding Nordic American Tankers or generate 5.86% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.36% |
Values | Daily Returns |
Scorpio Tankers vs. Nordic American Tankers
Performance |
Timeline |
Scorpio Tankers |
Nordic American Tankers |
Scorpio Tankers and Nordic American Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scorpio Tankers and Nordic American
The main advantage of trading using opposite Scorpio Tankers and Nordic American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scorpio Tankers position performs unexpectedly, Nordic American 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 Nordic American will offset losses from the drop in Nordic American's long position.Scorpio Tankers vs. Teekay Tankers | Scorpio Tankers vs. Navigator Holdings | Scorpio Tankers vs. DHT Holdings | Scorpio Tankers vs. Frontline |
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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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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