Correlation Between International Seaways and Cheniere Energy
Can any of the company-specific risk be diversified away by investing in both International Seaways and Cheniere 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 International Seaways and Cheniere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between International Seaways and Cheniere Energy, you can compare the effects of market volatilities on International Seaways and Cheniere 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 International Seaways with a short position of Cheniere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of International Seaways and Cheniere Energy.
Diversification Opportunities for International Seaways and Cheniere Energy
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between International and Cheniere is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding International Seaways and Cheniere Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cheniere Energy 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 Cheniere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cheniere Energy has no effect on the direction of International Seaways i.e., International Seaways and Cheniere Energy go up and down completely randomly.
Pair Corralation between International Seaways and Cheniere Energy
Given the investment horizon of 90 days International Seaways is expected to under-perform the Cheniere Energy. But the stock apears to be less risky and, when comparing its historical volatility, International Seaways is 1.27 times less risky than Cheniere Energy. The stock trades about -0.24 of its potential returns per unit of risk. The Cheniere Energy is currently generating about 0.51 of returns per unit of risk over similar time horizon. If you would invest 18,313 in Cheniere Energy on August 27, 2024 and sell it today you would earn a total of 3,947 from holding Cheniere Energy or generate 21.55% 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. Cheniere Energy
Performance |
| Timeline |
| International Seaways |
| Cheniere Energy |
International Seaways and Cheniere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with International Seaways and Cheniere Energy
The main advantage of trading using opposite International Seaways and Cheniere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if International Seaways position performs unexpectedly, Cheniere 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 Cheniere Energy will offset losses from the drop in Cheniere Energy's long position.| International Seaways vs. Teekay Tankers | International Seaways vs. Frontline | International Seaways vs. DHT Holdings | International Seaways vs. Scorpio Tankers |
| Cheniere Energy vs. Western Midstream Partners | Cheniere Energy vs. Williams Companies | Cheniere Energy vs. Enterprise Products Partners | Cheniere Energy vs. ONEOK Inc |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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