Correlation Between Teekay Tankers and Cheniere Energy

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

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

Diversification Opportunities for Teekay Tankers and Cheniere Energy

-0.83

Correlation Coefficient

Teekay Tankers  Cheniere Energy

Pay attention - limited upside

The 3 months correlation between Teekay and Cheniere is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Teekay Tankers and Cheniere Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy Partners and Teekay Tankers 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 Tankers are associated (or correlated) with Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy Partners has no effect on the direction of Teekay Tankers i.e., Teekay Tankers and Cheniere Energy go up and down completely randomly.

Pair Corralation between Teekay Tankers and Cheniere Energy

Considering the 90-day investment horizon Teekay Tankers is expected to under-perform the Cheniere Energy. In addition to that, Teekay Tankers is 1.45 times more volatile than Cheniere Energy Partners. It trades about -0.04 of its total potential returns per unit of risk. Cheniere Energy Partners is currently generating about 0.04 per unit of volatility. If you would invest  4,846  in Cheniere Energy Partners on September 19, 2024 and sell it today you would earn a total of  563.00  from holding Cheniere Energy Partners or generate 11.62% return on investment over 90 days.

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

Teekay Tankers  vs.  Cheniere Energy Partners

Teekay Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teekay Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators 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.

Cheniere Energy Partners

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating basic indicators, Cheniere Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teekay Tankers and Cheniere Energy

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

The idea behind Teekay Tankers and Cheniere Energy Partners 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.