Correlation Between Teekay and Viper Energy

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

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

Diversification Opportunities for Teekay and Viper Energy

-0.49

Correlation Coefficient

Teekay  Viper Energy

Very good diversification

The 3 months correlation between Teekay and Viper is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Teekay and Viper Energy Ut in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viper Energy Ut 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 Viper Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viper Energy Ut has no effect on the direction of Teekay i.e., Teekay and Viper Energy go up and down completely randomly.

Pair Corralation between Teekay and Viper Energy

Allowing for the 90-day total investment horizon Teekay is expected to generate 1.51 times more return on investment than Viper Energy. However, Teekay is 1.51 times more volatile than Viper Energy Ut. It trades about 0.04 of its potential returns per unit of risk. Viper Energy Ut is currently generating about -0.36 per unit of risk. If you would invest  666.00  in Teekay on September 27, 2024 and sell it today you would earn a total of  9.00  from holding Teekay or generate 1.35% return on investment over 90 days.

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

Teekay  vs.  Viper Energy Ut

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.

Viper Energy Ut

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Viper Energy Ut are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Viper Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Teekay and Viper Energy

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

The idea behind Teekay and Viper Energy Ut 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.

Check out your portfolio center.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..