Correlation Between Cheniere Energy and Tsakos Energy

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

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

Diversification Opportunities for Cheniere Energy and Tsakos Energy

-0.82

Correlation Coefficient

Cheniere Energy  Tsakos Energy

Pay attention - limited upside

The 3 months correlation between Cheniere and Tsakos is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Cheniere Energy Partners and Tsakos Energy Navigation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsakos Energy Navigation and Cheniere Energy 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 Cheniere Energy Partners are associated (or correlated) with Tsakos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsakos Energy Navigation has no effect on the direction of Cheniere Energy i.e., Cheniere Energy and Tsakos Energy go up and down completely randomly.

Pair Corralation between Cheniere Energy and Tsakos Energy

Considering the 90-day investment horizon Cheniere Energy Partners is expected to generate 0.83 times more return on investment than Tsakos Energy. However, Cheniere Energy Partners is 1.21 times less risky than Tsakos Energy. It trades about -0.01 of its potential returns per unit of risk. Tsakos Energy Navigation is currently generating about -0.15 per unit of risk. If you would invest  5,432  in Cheniere Energy Partners on September 25, 2024 and sell it today you would lose (38.00) from holding Cheniere Energy Partners or give up 0.7% of portfolio value over 90 days.

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

Cheniere Energy Partners  vs.  Tsakos Energy Navigation

Cheniere Energy Partners

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cheniere Energy Partners are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Cheniere Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Tsakos Energy Navigation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tsakos Energy Navigation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Cheniere Energy and Tsakos Energy

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

The idea behind Cheniere Energy Partners and Tsakos Energy Navigation 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.