Correlation Between Teekay and United Maritime

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

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

Diversification Opportunities for Teekay and United Maritime

0.88

Correlation Coefficient

Teekay  United Maritime

Very poor diversification

The 3 months correlation between Teekay and United is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Teekay and United Maritime in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Maritime and Teekay 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 are associated (or correlated) with United Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Maritime has no effect on the direction of Teekay i.e., Teekay and United Maritime go up and down completely randomly.

Pair Corralation between Teekay and United Maritime

Allowing for the 90-day total investment horizon Teekay is expected to generate 0.85 times more return on investment than United Maritime. However, Teekay is 1.18 times less risky than United Maritime. It trades about 0.07 of its potential returns per unit of risk. United Maritime is currently generating about -0.27 per unit of risk. If you would invest  648.00  in Teekay on September 28, 2024 and sell it today you would earn a total of  16.50  from holding Teekay or generate 2.55% return on investment over 90 days.

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

Teekay  vs.  United Maritime

Teekay

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Teekay has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's forward-looking signals 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.

United Maritime

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days United Maritime has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Teekay and United Maritime

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

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