Correlation Between Euronav NV and TransAtlantic Petroleum
Can any of the company-specific risk be diversified away by investing in both Euronav NV 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 Euronav NV and TransAtlantic Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Euronav NV and TransAtlantic Petroleum, you can compare the effects of market volatilities on Euronav NV 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 Euronav NV with a short position of TransAtlantic Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Euronav NV and TransAtlantic Petroleum.
Diversification Opportunities for Euronav NV and TransAtlantic Petroleum
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Euronav and TransAtlantic is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Euronav NV and TransAtlantic Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TransAtlantic Petroleum and Euronav NV 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 Euronav NV 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 Euronav NV i.e., Euronav NV and TransAtlantic Petroleum go up and down completely randomly.
Pair Corralation between Euronav NV and TransAtlantic Petroleum
Given the investment horizon of 90 days Euronav NV is expected to generate 1.15 times more return on investment than TransAtlantic Petroleum. However, Euronav NV is 1.15 times more volatile than TransAtlantic Petroleum. It trades about 0.21 of its potential returns per unit of risk. TransAtlantic Petroleum is currently generating about -0.1 per unit of risk. If you would invest 1,425 in Euronav NV on August 27, 2024 and sell it today you would earn a total of 206.00 from holding Euronav NV or generate 14.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 71.88% |
| Values | Daily Returns |
Euronav NV vs. TransAtlantic Petroleum
Performance |
| Timeline |
| Euronav NV |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| TransAtlantic Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Euronav NV and TransAtlantic Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Euronav NV and TransAtlantic Petroleum
The main advantage of trading using opposite Euronav NV and TransAtlantic Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Euronav NV 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.| Euronav NV vs. Frontline | Euronav NV vs. Teekay Tankers | Euronav NV vs. Scorpio Tankers | Euronav NV vs. DHT Holdings |
| 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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