Correlation Between Dynagas LNG and TransAtlantic Petroleum
Can any of the company-specific risk be diversified away by investing in both Dynagas LNG 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 Dynagas LNG and TransAtlantic Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dynagas LNG Partners and TransAtlantic Petroleum, you can compare the effects of market volatilities on Dynagas LNG 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 Dynagas LNG with a short position of TransAtlantic Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dynagas LNG and TransAtlantic Petroleum.
Diversification Opportunities for Dynagas LNG and TransAtlantic Petroleum
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dynagas and TransAtlantic is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Dynagas LNG Partners and TransAtlantic Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAtlantic Petroleum and Dynagas LNG 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 Dynagas LNG Partners 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 Dynagas LNG i.e., Dynagas LNG and TransAtlantic Petroleum go up and down completely randomly.
Pair Corralation between Dynagas LNG and TransAtlantic Petroleum
Assuming the 90 days trading horizon Dynagas LNG is expected to generate 10.79 times less return on investment than TransAtlantic Petroleum. But when comparing it to its historical volatility, Dynagas LNG Partners is 3.79 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 0.14 of returns per unit of risk over similar time horizon. If you would invest 2,859 in TransAtlantic Petroleum on September 12, 2024 and sell it today you would earn a total of 69.00 from holding TransAtlantic Petroleum or generate 2.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 8.87% |
| Values | Daily Returns |
Dynagas LNG Partners vs. TransAtlantic Petroleum
Performance |
| Timeline |
| Dynagas LNG Partners |
| TransAtlantic Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dynagas LNG and TransAtlantic Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dynagas LNG and TransAtlantic Petroleum
The main advantage of trading using opposite Dynagas LNG and TransAtlantic Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dynagas LNG 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.| Dynagas LNG vs. GasLog Partners LP | Dynagas LNG vs. Dynagas LNG Partners | Dynagas LNG vs. GasLog Partners LP | Dynagas LNG vs. Seapeak LLC |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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