Correlation Between Teekay Tankers and Golar LNG

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

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

Diversification Opportunities for Teekay Tankers and Golar LNG

-0.46

Correlation Coefficient

Teekay Tankers  Golar LNG

Very good diversification

The 3 months correlation between Teekay and Golar is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Teekay Tankers and Golar LNG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golar LNG Limited 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 Golar LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golar LNG Limited has no effect on the direction of Teekay Tankers i.e., Teekay Tankers and Golar LNG go up and down completely randomly.

Pair Corralation between Teekay Tankers and Golar LNG

Considering the 90-day investment horizon Teekay Tankers is expected to under-perform the Golar LNG. But the stock apears to be less risky and, when comparing its historical volatility, Teekay Tankers is 1.51 times less risky than Golar LNG. The stock trades about -0.45 of its potential returns per unit of risk. The Golar LNG Limited is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  3,745  in Golar LNG Limited on September 19, 2024 and sell it today you would earn a total of  425.00  from holding Golar LNG Limited or generate 11.35% return on investment over 90 days.

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

Teekay Tankers  vs.  Golar LNG Limited

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.

Golar LNG Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Golar LNG Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Golar LNG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teekay Tankers and Golar LNG

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

The idea behind Teekay Tankers and Golar LNG Limited 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.