Correlation Between Nordic American and International Seaways

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Can any of the company-specific risk be diversified away by investing in both Nordic American and International Seaways 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 Nordic American and International Seaways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nordic American Tanker and International Seaways, you can compare the effects of market volatilities on Nordic American and International Seaways 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 Nordic American with a short position of International Seaways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordic American and International Seaways.

Diversification Opportunities for Nordic American and International Seaways

0.95
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Nordic and International is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Nordic American Tanker and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways and Nordic American 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 Nordic American Tanker are associated (or correlated) with International Seaways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Seaways has no effect on the direction of Nordic American i.e., Nordic American and International Seaways go up and down completely randomly.

Pair Corralation between Nordic American and International Seaways

Considering the 90-day investment horizon Nordic American Tanker is expected to generate 1.64 times more return on investment than International Seaways. However, Nordic American is 1.64 times more volatile than International Seaways. It trades about 0.13 of its potential returns per unit of risk. International Seaways is currently generating about 0.2 per unit of risk. If you would invest  267.00  in Nordic American Tanker on June 27, 2022 and sell it today you would earn a total of  37.00  from holding Nordic American Tanker or generate 13.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy95.45%
ValuesDaily Returns

Nordic American Tanker  vs.  International Seaways

 Performance (%) 
       Timeline  
Nordic American Tanker 
Nordic Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Nordic American Tanker are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively sluggish basic indicators, Nordic American unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nordic Price Channel

International Seaways 
International Performance
18 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in International Seaways are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, International Seaways showed solid returns over the last few months and may actually be approaching a breakup point.

International Price Channel

Nordic American and International Seaways Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nordic American and International Seaways

The main advantage of trading using opposite Nordic American and International Seaways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nordic American position performs unexpectedly, International Seaways 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 International Seaways will offset losses from the drop in International Seaways' long position.
Nordic American vs. Sigma Lithium Corp
The idea behind Nordic American Tanker and International Seaways 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.
International Seaways vs. Industrias Bachoco SA
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 Transaction History module to view history of all your transactions and understand their impact on performance.

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