Correlation Between Tsakos Energy and Plains GP

Can any of the company-specific risk be diversified away by investing in both Tsakos Energy and Plains GP 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 Plains GP 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 Plains GP Holdings, you can compare the effects of market volatilities on Tsakos Energy and Plains GP 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 Plains GP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsakos Energy and Plains GP.

Diversification Opportunities for Tsakos Energy and Plains GP

-0.34

Correlation Coefficient

Tsakos Energy  Plains GP

Very good diversification

The 3 months correlation between Tsakos and Plains is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Tsakos Energy Navigation and Plains GP Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plains GP Holdings 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 Plains GP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plains GP Holdings has no effect on the direction of Tsakos Energy i.e., Tsakos Energy and Plains GP go up and down completely randomly.

Pair Corralation between Tsakos Energy and Plains GP

Considering the 90-day investment horizon Tsakos Energy is expected to generate 1.65 times less return on investment than Plains GP. In addition to that, Tsakos Energy is 1.84 times more volatile than Plains GP Holdings. It trades about 0.03 of its total potential returns per unit of risk. Plains GP Holdings is currently generating about 0.1 per unit of volatility. If you would invest  1,149  in Plains GP Holdings on October 21, 2024 and sell it today you would earn a total of  994.00  from holding Plains GP Holdings or generate 86.51% return on investment over 90 days.

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

Tsakos Energy Navigation  vs.  Plains GP Holdings

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 weak 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.

Plains GP Holdings

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Plains GP Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Plains GP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tsakos Energy and Plains GP

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

The idea behind Tsakos Energy Navigation and Plains GP Holdings 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 Transaction History module to view history of all your transactions and understand their impact on performance.