Correlation Between Teekay and Pyxis Tankers

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

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

Diversification Opportunities for Teekay and Pyxis Tankers

0.66

Correlation Coefficient

Teekay  Pyxis Tankers

Poor diversification

The 3 months correlation between Teekay and Pyxis is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Teekay and Pyxis Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pyxis Tankers 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 Pyxis Tankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pyxis Tankers has no effect on the direction of Teekay i.e., Teekay and Pyxis Tankers go up and down completely randomly.

Pair Corralation between Teekay and Pyxis Tankers

Allowing for the 90-day total investment horizon Teekay is expected to generate 20.31 times less return on investment than Pyxis Tankers. But when comparing it to its historical volatility, Teekay is 10.42 times less risky than Pyxis Tankers. It trades about 0.04 of its potential returns per unit of risk. Pyxis Tankers is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  25.00  in Pyxis Tankers on September 27, 2024 and sell it today you would lose (3.00) from holding Pyxis Tankers or give up 12.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	77.27%
Values	Daily Returns

Teekay  vs.  Pyxis Tankers

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 weak performance in the last few months, the Stock's forward-looking signals remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pyxis Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pyxis Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with Teekay and Pyxis Tankers

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

The idea behind Teekay and Pyxis Tankers 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.