Correlation Between DHT Holdings and Scorpio Tankers
Can any of the company-specific risk be diversified away by investing in both DHT Holdings and Scorpio Tankers 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 DHT Holdings and Scorpio Tankers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DHT Holdings and Scorpio Tankers, you can compare the effects of market volatilities on DHT Holdings and Scorpio Tankers 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 DHT Holdings with a short position of Scorpio Tankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of DHT Holdings and Scorpio Tankers.
Diversification Opportunities for DHT Holdings and Scorpio Tankers
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DHT and Scorpio is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding DHT Holdings and Scorpio Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scorpio Tankers and DHT Holdings 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 DHT Holdings are associated (or correlated) with Scorpio Tankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scorpio Tankers has no effect on the direction of DHT Holdings i.e., DHT Holdings and Scorpio Tankers go up and down completely randomly.
Pair Corralation between DHT Holdings and Scorpio Tankers
Considering the 90-day investment horizon DHT Holdings is expected to generate 1.29 times more return on investment than Scorpio Tankers. However, DHT Holdings is 1.29 times more volatile than Scorpio Tankers. It trades about 0.01 of its potential returns per unit of risk. Scorpio Tankers is currently generating about -0.42 per unit of risk. If you would invest 1,037 in DHT Holdings on August 24, 2024 and sell it today you would earn a total of 0.00 from holding DHT Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DHT Holdings vs. Scorpio Tankers
Performance |
| Timeline |
| DHT Holdings |
| Scorpio Tankers |
DHT Holdings and Scorpio Tankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DHT Holdings and Scorpio Tankers
The main advantage of trading using opposite DHT Holdings and Scorpio Tankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DHT Holdings position performs unexpectedly, Scorpio Tankers 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 Scorpio Tankers will offset losses from the drop in Scorpio Tankers' long position.| DHT Holdings vs. Teekay Tankers | DHT Holdings vs. Frontline | DHT Holdings vs. International Seaways | DHT Holdings vs. Scorpio Tankers |
| Scorpio Tankers vs. Teekay Tankers | Scorpio Tankers vs. Navigator Holdings | Scorpio Tankers vs. DHT Holdings | Scorpio Tankers vs. Frontline |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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