Correlation Between Brooge Energy and Teekay
Can any of the company-specific risk be diversified away by investing in both Brooge Energy and Teekay 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 Brooge Energy and Teekay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Brooge Energy Limited and Teekay, you can compare the effects of market volatilities on Brooge Energy and Teekay 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 Brooge Energy with a short position of Teekay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brooge Energy and Teekay.
Diversification Opportunities for Brooge Energy and Teekay
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Brooge and Teekay is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Brooge Energy Limited and Teekay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay and Brooge Energy 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 Brooge Energy Limited are associated (or correlated) with Teekay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teekay has no effect on the direction of Brooge Energy i.e., Brooge Energy and Teekay go up and down completely randomly.
Pair Corralation between Brooge Energy and Teekay
Assuming the 90 days horizon Brooge Energy Limited is expected to generate 66.75 times more return on investment than Teekay. However, Brooge Energy is 66.75 times more volatile than Teekay. It trades about 0.18 of its potential returns per unit of risk. Teekay is currently generating about -0.04 per unit of risk. If you would invest 0.40 in Brooge Energy Limited on August 31, 2024 and sell it today you would lose (0.29) from holding Brooge Energy Limited or give up 72.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 60.32% |
| Values | Daily Returns |
Brooge Energy Limited vs. Teekay
Performance |
| Timeline |
| Brooge Energy Limited |
| Teekay |
Brooge Energy and Teekay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Brooge Energy and Teekay
The main advantage of trading using opposite Brooge Energy and Teekay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Brooge Energy position performs unexpectedly, Teekay 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 Teekay will offset losses from the drop in Teekay's long position.The idea behind Brooge Energy Limited and Teekay 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.| Teekay vs. Teekay Tankers | Teekay vs. DHT Holdings | Teekay vs. Frontline | Teekay vs. International Seaways |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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