Correlation Between Teekay and Williams Companies

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

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

Diversification Opportunities for Teekay and Williams Companies

0.11

Correlation Coefficient

Teekay  Williams Companies

Average diversification

The 3 months correlation between Teekay and Williams is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Teekay and Williams Companies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Williams Companies 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 Williams Companies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Williams Companies has no effect on the direction of Teekay i.e., Teekay and Williams Companies go up and down completely randomly.

Pair Corralation between Teekay and Williams Companies

Allowing for the 90-day total investment horizon Teekay is expected to under-perform the Williams Companies. In addition to that, Teekay is 1.13 times more volatile than Williams Companies. It trades about 0.0 of its total potential returns per unit of risk. Williams Companies is currently generating about 0.09 per unit of volatility. If you would invest  5,368  in Williams Companies on December 28, 2024 and sell it today you would earn a total of  551.00  from holding Williams Companies or generate 10.26% return on investment over 90 days.

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

Teekay  vs.  Williams Companies

Teekay

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teekay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Teekay is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Williams Companies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Williams Companies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady primary indicators, Williams Companies may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Teekay and Williams Companies

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

The idea behind Teekay and Williams Companies 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.