Correlation Between Castor Maritime and Tsakos Energy

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

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

Diversification Opportunities for Castor Maritime and Tsakos Energy

0.92

Correlation Coefficient

Castor Maritime  Tsakos Energy

Almost no diversification

The 3 months correlation between Castor and Tsakos is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Castor Maritime 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 Castor Maritime 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 Castor Maritime 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 Castor Maritime i.e., Castor Maritime and Tsakos Energy go up and down completely randomly.

Pair Corralation between Castor Maritime and Tsakos Energy

Given the investment horizon of 90 days Castor Maritime is expected to under-perform the Tsakos Energy. In addition to that, Castor Maritime is 1.49 times more volatile than Tsakos Energy Navigation. It trades about -0.29 of its total potential returns per unit of risk. Tsakos Energy Navigation is currently generating about -0.26 per unit of volatility. If you would invest  1,887  in Tsakos Energy Navigation on September 24, 2024 and sell it today you would lose (232.00) from holding Tsakos Energy Navigation or give up 12.29% of portfolio value over 90 days.

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

Castor Maritime  vs.  Tsakos Energy Navigation

Castor Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Castor Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic 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.

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 Castor Maritime and Tsakos Energy

The main advantage of trading using opposite Castor Maritime and Tsakos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Castor Maritime 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 Castor Maritime 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.