Correlation Between Teekay Tankers and Euronav NV

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

By analyzing existing cross correlation between Teekay Tankers and Euronav NV, you can compare the effects of market volatilities on Teekay Tankers and Euronav NV 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 Euronav NV. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teekay Tankers and Euronav NV.

Diversification Opportunities for Teekay Tankers and Euronav NV

-0.11

Correlation Coefficient

Teekay Tankers  Euronav NV

Good diversification

The 3 months correlation between Teekay and Euronav is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Teekay Tankers and Euronav NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Euronav NV 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 Euronav NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Euronav NV has no effect on the direction of Teekay Tankers i.e., Teekay Tankers and Euronav NV go up and down completely randomly.

Pair Corralation between Teekay Tankers and Euronav NV

Considering the 90-day investment horizon Teekay Tankers is expected to under-perform the Euronav NV. In addition to that, Teekay Tankers is 1.6 times more volatile than Euronav NV. It trades about -0.08 of its total potential returns per unit of risk. Euronav NV is currently generating about 0.06 per unit of volatility. If you would invest  1,661  in Euronav NV on January 31, 2024 and sell it today you would earn a total of  24.00  from holding Euronav NV or generate 1.44% return on investment over 90 days.

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

Teekay Tankers  vs.  Euronav NV

Teekay Tankers

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teekay Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Teekay Tankers is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Euronav NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Euronav NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Euronav NV is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Teekay Tankers and Euronav NV

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

The idea behind Teekay Tankers and Euronav NV 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.