Correlation Between International Seaways and Golar LNG
Can any of the company-specific risk be diversified away by investing in both International Seaways and Golar LNG 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 International Seaways and Golar LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Seaways and Golar LNG Limited, you can compare the effects of market volatilities on International Seaways and Golar LNG 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 International Seaways with a short position of Golar LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Seaways and Golar LNG.
Diversification Opportunities for International Seaways and Golar LNG
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and Golar is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding International Seaways and Golar LNG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golar LNG Limited and International Seaways 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 International Seaways are associated (or correlated) with Golar LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golar LNG Limited has no effect on the direction of International Seaways i.e., International Seaways and Golar LNG go up and down completely randomly.
Pair Corralation between International Seaways and Golar LNG
Given the investment horizon of 90 days International Seaways is expected to generate 1.82 times less return on investment than Golar LNG. In addition to that, International Seaways is 1.11 times more volatile than Golar LNG Limited. It trades about 0.04 of its total potential returns per unit of risk. Golar LNG Limited is currently generating about 0.08 per unit of volatility. If you would invest 2,167 in Golar LNG Limited on October 21, 2024 and sell it today you would earn a total of 2,015 from holding Golar LNG Limited or generate 92.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
International Seaways vs. Golar LNG Limited
Performance |
| Timeline |
| International Seaways |
| Golar LNG Limited |
International Seaways and Golar LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Seaways and Golar LNG
The main advantage of trading using opposite International Seaways and Golar LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Seaways position performs unexpectedly, Golar LNG 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 Golar LNG will offset losses from the drop in Golar LNG's long position.| International Seaways vs. Teekay Tankers | International Seaways vs. Frontline | International Seaways vs. DHT Holdings | International Seaways vs. Scorpio Tankers |
| Golar LNG vs. Teekay Tankers | Golar LNG vs. International Seaways | Golar LNG vs. Frontline | Golar LNG vs. DHT Holdings |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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