Correlation Between Teekay Tankers and Hafnia
Can any of the company-specific risk be diversified away by investing in both Teekay Tankers and Hafnia 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 Hafnia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teekay Tankers and Hafnia Limited, you can compare the effects of market volatilities on Teekay Tankers and Hafnia 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 Hafnia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teekay Tankers and Hafnia.
Diversification Opportunities for Teekay Tankers and Hafnia
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Teekay and Hafnia is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Teekay Tankers and Hafnia Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hafnia 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 Hafnia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hafnia Limited has no effect on the direction of Teekay Tankers i.e., Teekay Tankers and Hafnia go up and down completely randomly.
Pair Corralation between Teekay Tankers and Hafnia
Considering the 90-day investment horizon Teekay Tankers is expected to under-perform the Hafnia. But the stock apears to be less risky and, when comparing its historical volatility, Teekay Tankers is 1.14 times less risky than Hafnia. The stock trades about -0.29 of its potential returns per unit of risk. The Hafnia Limited is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 715.00 in Hafnia Limited on September 16, 2024 and sell it today you would lose (173.00) from holding Hafnia Limited or give up 24.2% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Teekay Tankers vs. Hafnia Limited
Performance |
Timeline |
Teekay Tankers |
Hafnia Limited |
Teekay Tankers and Hafnia Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Teekay Tankers and Hafnia
The main advantage of trading using opposite Teekay Tankers and Hafnia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teekay Tankers position performs unexpectedly, Hafnia 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 Hafnia will offset losses from the drop in Hafnia's long position.Teekay Tankers vs. DT Midstream | Teekay Tankers vs. MPLX LP | Teekay Tankers vs. Plains All American | Teekay Tankers vs. Hess Midstream Partners |
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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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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