Correlation Between Frontline and Teekay
Can any of the company-specific risk be diversified away by investing in both Frontline 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 Frontline and Teekay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Frontline and Teekay, you can compare the effects of market volatilities on Frontline 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 Frontline with a short position of Teekay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Frontline and Teekay.
Diversification Opportunities for Frontline and Teekay
Very weak diversification
The 3 months correlation between Frontline and Teekay is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Frontline and Teekay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay and Frontline 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 Frontline 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 Frontline i.e., Frontline and Teekay go up and down completely randomly.
Pair Corralation between Frontline and Teekay
Considering the 90-day investment horizon Frontline is expected to generate 1.79 times more return on investment than Teekay. However, Frontline is 1.79 times more volatile than Teekay. It trades about 0.22 of its potential returns per unit of risk. Teekay is currently generating about -0.03 per unit of risk. If you would invest 1,469 in Frontline on November 2, 2024 and sell it today you would earn a total of 279.00 from holding Frontline or generate 18.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Frontline vs. Teekay
Performance |
| Timeline |
| Frontline |
| Teekay |
Frontline and Teekay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Frontline and Teekay
The main advantage of trading using opposite Frontline and Teekay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frontline 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.| Frontline vs. Teekay Tankers | Frontline vs. DHT Holdings | Frontline vs. International Seaways | Frontline vs. Scorpio Tankers |
| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
Other Complementary Tools
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities |