Correlation Between DHT Holdings and Teekay
Can any of the company-specific risk be diversified away by investing in both DHT Holdings 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 DHT Holdings and Teekay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DHT Holdings and Teekay, you can compare the effects of market volatilities on DHT Holdings 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 DHT Holdings with a short position of Teekay. Check out your portfolio center. Please also check ongoing floating volatility patterns of DHT Holdings and Teekay.
Diversification Opportunities for DHT Holdings and Teekay
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between DHT and Teekay is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding DHT Holdings and Teekay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay 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 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 DHT Holdings i.e., DHT Holdings and Teekay go up and down completely randomly.
Pair Corralation between DHT Holdings and Teekay
Considering the 90-day investment horizon DHT Holdings is expected to generate 0.88 times more return on investment than Teekay. However, DHT Holdings is 1.13 times less risky than Teekay. It trades about -0.04 of its potential returns per unit of risk. Teekay is currently generating about -0.07 per unit of risk. If you would invest 1,189 in DHT Holdings on August 24, 2024 and sell it today you would lose (152.00) from holding DHT Holdings or give up 12.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DHT Holdings vs. Teekay
Performance |
| Timeline |
| DHT Holdings |
| Teekay |
DHT Holdings and Teekay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DHT Holdings and Teekay
The main advantage of trading using opposite DHT Holdings and Teekay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DHT Holdings 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.| DHT Holdings vs. Teekay Tankers | DHT Holdings vs. Frontline | DHT Holdings vs. International Seaways | DHT Holdings vs. Scorpio Tankers |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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