Correlation Between Marine Petroleum and Frontline
Can any of the company-specific risk be diversified away by investing in both Marine Petroleum and Frontline 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 Marine Petroleum and Frontline into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Marine Petroleum Trust and Frontline, you can compare the effects of market volatilities on Marine Petroleum and Frontline 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 Marine Petroleum with a short position of Frontline. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marine Petroleum and Frontline.
Diversification Opportunities for Marine Petroleum and Frontline
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Marine and Frontline is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Marine Petroleum Trust and Frontline in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frontline and Marine Petroleum 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 Marine Petroleum Trust are associated (or correlated) with Frontline. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frontline has no effect on the direction of Marine Petroleum i.e., Marine Petroleum and Frontline go up and down completely randomly.
Pair Corralation between Marine Petroleum and Frontline
Assuming the 90 days horizon Marine Petroleum Trust is expected to generate 0.83 times more return on investment than Frontline. However, Marine Petroleum Trust is 1.2 times less risky than Frontline. It trades about -0.01 of its potential returns per unit of risk. Frontline is currently generating about -0.05 per unit of risk. If you would invest 403.00 in Marine Petroleum Trust on August 24, 2024 and sell it today you would lose (3.00) from holding Marine Petroleum Trust or give up 0.74% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Marine Petroleum Trust vs. Frontline
Performance |
| Timeline |
| Marine Petroleum Trust |
| Frontline |
Marine Petroleum and Frontline Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Marine Petroleum and Frontline
The main advantage of trading using opposite Marine Petroleum and Frontline positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Marine Petroleum position performs unexpectedly, Frontline 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 Frontline will offset losses from the drop in Frontline's long position.| Marine Petroleum vs. GasLog Partners LP | Marine Petroleum vs. GasLog Partners LP | Marine Petroleum vs. Brooge Holdings | Marine Petroleum vs. Dynagas LNG Partners |
| Frontline vs. Teekay Tankers | Frontline vs. DHT Holdings | Frontline vs. International Seaways | Frontline vs. Scorpio Tankers |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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