Correlation Between Teekay and Genesis Energy

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

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

Diversification Opportunities for Teekay and Genesis Energy

0.57

Correlation Coefficient

Teekay  Genesis Energy

Very weak diversification

The 3 months correlation between Teekay and Genesis is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Teekay and Genesis Energy LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Energy LP and Teekay 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 Teekay are associated (or correlated) with Genesis Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Energy LP has no effect on the direction of Teekay i.e., Teekay and Genesis Energy go up and down completely randomly.

Pair Corralation between Teekay and Genesis Energy

Allowing for the 90-day total investment horizon Teekay is expected to generate 1.24 times more return on investment than Genesis Energy. However, Teekay is 1.24 times more volatile than Genesis Energy LP. It trades about 0.07 of its potential returns per unit of risk. Genesis Energy LP is currently generating about 0.04 per unit of risk. If you would invest  332.00  in Teekay on September 3, 2024 and sell it today you would earn a total of  406.00  from holding Teekay or generate 122.29% return on investment over 90 days.

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

Teekay  vs.  Genesis Energy LP

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 latest abnormal performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Genesis Energy LP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Energy LP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Teekay and Genesis Energy

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

The idea behind Teekay and Genesis Energy 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.