Correlation Between Teekay Tankers and Kinder Morgan

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

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

Diversification Opportunities for Teekay Tankers and Kinder Morgan

-0.86

Correlation Coefficient

Teekay Tankers  Kinder Morgan

Pay attention - limited upside

The 3 months correlation between Teekay and Kinder is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding Teekay Tankers and Kinder Morgan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinder Morgan 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 Kinder Morgan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinder Morgan has no effect on the direction of Teekay Tankers i.e., Teekay Tankers and Kinder Morgan go up and down completely randomly.

Pair Corralation between Teekay Tankers and Kinder Morgan

Considering the 90-day investment horizon Teekay Tankers is expected to generate 3.65 times less return on investment than Kinder Morgan. In addition to that, Teekay Tankers is 2.12 times more volatile than Kinder Morgan. It trades about 0.02 of its total potential returns per unit of risk. Kinder Morgan is currently generating about 0.13 per unit of volatility. If you would invest  1,490  in Kinder Morgan on October 5, 2024 and sell it today you would earn a total of  1,321  from holding Kinder Morgan or generate 88.66% 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.  Kinder Morgan

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 February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Kinder Morgan

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Kinder Morgan are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady primary indicators, Kinder Morgan demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teekay Tankers and Kinder Morgan

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

The idea behind Teekay Tankers and Kinder Morgan 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.