Correlation Between Teekay Tankers and EURN Old

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

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

Diversification Opportunities for Teekay Tankers and EURN Old

0.0

Correlation Coefficient

Teekay Tankers  EURN Old

Pay attention - limited upside

The 3 months correlation between Teekay and EURN is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Teekay Tankers and EURN Old in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EURN Old 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 EURN Old. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EURN Old has no effect on the direction of Teekay Tankers i.e., Teekay Tankers and EURN Old go up and down completely randomly.

Pair Corralation between Teekay Tankers and EURN Old

If you would invest  3,860  in Teekay Tankers on December 29, 2024 and sell it today you would lose (43.00) from holding Teekay Tankers or give up 1.11% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Teekay Tankers  vs.  EURN Old

Teekay Tankers

Risk-Adjusted Performance

Very Weak

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

EURN Old

Risk-Adjusted Performance

Very Weak

Over the last 90 days EURN Old has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, EURN Old is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Teekay Tankers and EURN Old

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

The idea behind Teekay Tankers and EURN Old 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.