Correlation Between DHT Holdings and TransAtlantic Petroleum
Can any of the company-specific risk be diversified away by investing in both DHT Holdings and TransAtlantic Petroleum 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 TransAtlantic Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DHT Holdings and TransAtlantic Petroleum, you can compare the effects of market volatilities on DHT Holdings and TransAtlantic Petroleum 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 TransAtlantic Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of DHT Holdings and TransAtlantic Petroleum.
Diversification Opportunities for DHT Holdings and TransAtlantic Petroleum
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between DHT and TransAtlantic is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding DHT Holdings and TransAtlantic Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAtlantic Petroleum 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 TransAtlantic Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TransAtlantic Petroleum has no effect on the direction of DHT Holdings i.e., DHT Holdings and TransAtlantic Petroleum go up and down completely randomly.
Pair Corralation between DHT Holdings and TransAtlantic Petroleum
Considering the 90-day investment horizon DHT Holdings is expected to generate 1.75 times less return on investment than TransAtlantic Petroleum. But when comparing it to its historical volatility, DHT Holdings is 1.12 times less risky than TransAtlantic Petroleum. It trades about 0.05 of its potential returns per unit of risk. TransAtlantic Petroleum is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,735 in TransAtlantic Petroleum on August 27, 2024 and sell it today you would earn a total of 1,193 from holding TransAtlantic Petroleum or generate 68.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 77.36% |
| Values | Daily Returns |
DHT Holdings vs. TransAtlantic Petroleum
Performance |
| Timeline |
| DHT Holdings |
| TransAtlantic Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
DHT Holdings and TransAtlantic Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DHT Holdings and TransAtlantic Petroleum
The main advantage of trading using opposite DHT Holdings and TransAtlantic Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DHT Holdings position performs unexpectedly, TransAtlantic Petroleum 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 TransAtlantic Petroleum will offset losses from the drop in TransAtlantic Petroleum's long position.| DHT Holdings vs. Teekay Tankers | DHT Holdings vs. Frontline | DHT Holdings vs. International Seaways | DHT Holdings vs. Scorpio Tankers |
| TransAtlantic Petroleum vs. Teekay | TransAtlantic Petroleum vs. Teekay Tankers | TransAtlantic Petroleum vs. DHT Holdings | TransAtlantic Petroleum 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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