Correlation Between FLEX LNG and DHT Holdings
Can any of the company-specific risk be diversified away by investing in both FLEX LNG and DHT Holdings 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 FLEX LNG and DHT Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLEX LNG and DHT Holdings, you can compare the effects of market volatilities on FLEX LNG and DHT Holdings 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 FLEX LNG with a short position of DHT Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and DHT Holdings.
Diversification Opportunities for FLEX LNG and DHT Holdings
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FLEX and DHT is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and DHT Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHT Holdings and FLEX 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 FLEX LNG are associated (or correlated) with DHT Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHT Holdings has no effect on the direction of FLEX LNG i.e., FLEX LNG and DHT Holdings go up and down completely randomly.
Pair Corralation between FLEX LNG and DHT Holdings
Given the investment horizon of 90 days FLEX LNG is expected to generate 3.06 times less return on investment than DHT Holdings. But when comparing it to its historical volatility, FLEX LNG is 1.64 times less risky than DHT Holdings. It trades about 0.15 of its potential returns per unit of risk. DHT Holdings is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 964.00 in DHT Holdings on November 2, 2024 and sell it today you would earn a total of 176.00 from holding DHT Holdings or generate 18.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLEX LNG vs. DHT Holdings
Performance |
| Timeline |
| FLEX LNG |
| DHT Holdings |
FLEX LNG and DHT Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLEX LNG and DHT Holdings
The main advantage of trading using opposite FLEX LNG and DHT Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLEX LNG position performs unexpectedly, DHT Holdings 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 DHT Holdings will offset losses from the drop in DHT Holdings' long position.| FLEX LNG vs. Frontline | FLEX LNG vs. Torm PLC Class | FLEX LNG vs. Navigator Holdings | FLEX LNG vs. Teekay Tankers |
| DHT Holdings vs. Teekay Tankers | DHT Holdings vs. Frontline | DHT Holdings vs. International Seaways | DHT Holdings vs. Scorpio Tankers |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |