Correlation Between FLEX LNG and Teekay
Can any of the company-specific risk be diversified away by investing in both FLEX LNG 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 FLEX LNG and Teekay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FLEX LNG and Teekay, you can compare the effects of market volatilities on FLEX LNG 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 FLEX LNG with a short position of Teekay. Check out your portfolio center. Please also check ongoing floating volatility patterns of FLEX LNG and Teekay.
Diversification Opportunities for FLEX LNG and Teekay
Very weak diversification
The 3 months correlation between FLEX and Teekay is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding FLEX LNG and Teekay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay 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 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 FLEX LNG i.e., FLEX LNG and Teekay go up and down completely randomly.
Pair Corralation between FLEX LNG and Teekay
Given the investment horizon of 90 days FLEX LNG is expected to under-perform the Teekay. But the stock apears to be less risky and, when comparing its historical volatility, FLEX LNG is 1.8 times less risky than Teekay. The stock trades about 0.0 of its potential returns per unit of risk. The Teekay is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 324.00 in Teekay on August 27, 2024 and sell it today you would earn a total of 469.00 from holding Teekay or generate 144.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FLEX LNG vs. Teekay
Performance |
| Timeline |
| FLEX LNG |
| Teekay |
FLEX LNG and Teekay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FLEX LNG and Teekay
The main advantage of trading using opposite FLEX LNG and Teekay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FLEX LNG 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.| FLEX LNG vs. Ucommune International | FLEX LNG vs. Lion Financial Group | FLEX LNG vs. HUMANA INC | FLEX LNG vs. Aquagold International |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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