Correlation Between Hess Midstream and Tsakos Energy
Can any of the company-specific risk be diversified away by investing in both Hess Midstream and Tsakos Energy 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 Hess Midstream and Tsakos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hess Midstream Partners and Tsakos Energy Navigation, you can compare the effects of market volatilities on Hess Midstream and Tsakos Energy 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 Hess Midstream with a short position of Tsakos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hess Midstream and Tsakos Energy.
Diversification Opportunities for Hess Midstream and Tsakos Energy
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hess and Tsakos is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Hess Midstream Partners and Tsakos Energy Navigation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsakos Energy Navigation and Hess Midstream 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 Hess Midstream Partners are associated (or correlated) with Tsakos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsakos Energy Navigation has no effect on the direction of Hess Midstream i.e., Hess Midstream and Tsakos Energy go up and down completely randomly.
Pair Corralation between Hess Midstream and Tsakos Energy
Given the investment horizon of 90 days Hess Midstream Partners is expected to generate 0.73 times more return on investment than Tsakos Energy. However, Hess Midstream Partners is 1.36 times less risky than Tsakos Energy. It trades about 0.07 of its potential returns per unit of risk. Tsakos Energy Navigation is currently generating about -0.21 per unit of risk. If you would invest 3,518 in Hess Midstream Partners on September 12, 2024 and sell it today you would earn a total of 77.00 from holding Hess Midstream Partners or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hess Midstream Partners vs. Tsakos Energy Navigation
Performance |
| Timeline |
| Hess Midstream Partners |
| Tsakos Energy Navigation |
Hess Midstream and Tsakos Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hess Midstream and Tsakos Energy
The main advantage of trading using opposite Hess Midstream and Tsakos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hess Midstream position performs unexpectedly, Tsakos Energy 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 Tsakos Energy will offset losses from the drop in Tsakos Energy's long position.| Hess Midstream vs. MPLX LP | Hess Midstream vs. Western Midstream Partners | Hess Midstream vs. Plains All American | Hess Midstream vs. Antero Midstream Partners |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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