Correlation Between Scorpio Tankers and Teekay

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

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

Diversification Opportunities for Scorpio Tankers and Teekay

0.64

Correlation Coefficient

Scorpio Tankers  Teekay

Poor diversification

The 3 months correlation between Scorpio and Teekay is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Scorpio Tankers and Teekay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay 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 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 Scorpio Tankers i.e., Scorpio Tankers and Teekay go up and down completely randomly.

Pair Corralation between Scorpio Tankers and Teekay

Given the investment horizon of 90 days Scorpio Tankers is expected to generate 1.51 times less return on investment than Teekay. In addition to that, Scorpio Tankers is 1.34 times more volatile than Teekay. It trades about 0.14 of its total potential returns per unit of risk. Teekay is currently generating about 0.28 per unit of volatility. If you would invest  661.00  in Teekay on October 22, 2024 and sell it today you would earn a total of  81.00  from holding Teekay or generate 12.25% return on investment over 90 days.

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

Scorpio Tankers  vs.  Teekay

Scorpio Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Scorpio Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Teekay

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teekay are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. 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 Scorpio Tankers and Teekay

The main advantage of trading using opposite Scorpio Tankers and Teekay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scorpio Tankers 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 Scorpio Tankers 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.