Correlation Between Tsakos Energy and Global Partners

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

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

Diversification Opportunities for Tsakos Energy and Global Partners

-0.59

Correlation Coefficient

Tsakos Energy  Global Partners

Excellent diversification

The 3 months correlation between Tsakos and Global is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tsakos Energy Navigation and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP and Tsakos Energy 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 Tsakos Energy Navigation are associated (or correlated) with Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of Tsakos Energy i.e., Tsakos Energy and Global Partners go up and down completely randomly.

Pair Corralation between Tsakos Energy and Global Partners

Considering the 90-day investment horizon Tsakos Energy Navigation is expected to generate 1.01 times more return on investment than Global Partners. However, Tsakos Energy is 1.01 times more volatile than Global Partners LP. It trades about 0.02 of its potential returns per unit of risk. Global Partners LP is currently generating about -0.37 per unit of risk. If you would invest  1,737  in Tsakos Energy Navigation on October 6, 2024 and sell it today you would earn a total of  3.00  from holding Tsakos Energy Navigation or generate 0.17% return on investment over 90 days.

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

Tsakos Energy Navigation  vs.  Global Partners LP

Tsakos Energy Navigation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsakos Energy Navigation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Global Partners LP

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Global Partners LP are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable essential indicators, Global Partners is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Tsakos Energy and Global Partners

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

The idea behind Tsakos Energy Navigation and Global Partners 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.

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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.