Correlation Between Euronav NV and Energy Transfer

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

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

Diversification Opportunities for Euronav NV and Energy Transfer

0.85
  Correlation Coefficient
Euronav NV
Energy Transfer LP

Very poor diversification

The 3 months correlation between Euronav and Energy is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Euronav NV and Energy Transfer LP in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on Energy Transfer LP and Euronav NV 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 Euronav NV are associated (or correlated) with Energy Transfer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Transfer LP has no effect on the direction of Euronav NV i.e., Euronav NV and Energy Transfer go up and down completely randomly.

Pair Corralation between Euronav NV and Energy Transfer

Given the investment horizon of 90 days Euronav NV is expected to generate 0.98 times more return on investment than Energy Transfer. However, Euronav NV is 1.02 times less risky than Energy Transfer. It trades about -0.04 of its potential returns per unit of risk. Energy Transfer LP is currently generating about -0.16 per unit of risk. If you would invest  919.00  in Euronav NV on June 23, 2021 and sell it today you would lose (54.00)  from holding Euronav NV or give up 5.88% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Euronav NV  vs.  Energy Transfer LP

 Performance (%) 
      Timeline 
Euronav NV 
 Euronav Performance
0 of 100
Over the last 90 days Euronav NV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Euronav NV is not utilizing all of its potentials. The new stock price mess, may contribute to short-term losses for the institutional investors.

Euronav Price Channel

Energy Transfer LP 
 Energy Performance
0 of 100
Over the last 90 days Energy Transfer LP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in October 2021. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Energy Price Channel

Euronav NV and Energy Transfer Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Euronav NV and Energy Transfer

The main advantage of trading using opposite Euronav NV and Energy Transfer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euronav NV position performs unexpectedly, Energy Transfer 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 Energy Transfer will offset losses from the drop in Energy Transfer's long position.
The idea behind Euronav NV and Energy Transfer LP 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.

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