Correlation Between Plains GP and International Seaways
Can any of the company-specific risk be diversified away by investing in both Plains GP and International Seaways 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 Plains GP and International Seaways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plains GP Holdings and International Seaways, you can compare the effects of market volatilities on Plains GP and International Seaways 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 Plains GP with a short position of International Seaways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plains GP and International Seaways.
Diversification Opportunities for Plains GP and International Seaways
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Plains and International is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Plains GP Holdings and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways and Plains GP 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 Plains GP Holdings are associated (or correlated) with International Seaways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Seaways has no effect on the direction of Plains GP i.e., Plains GP and International Seaways go up and down completely randomly.
Pair Corralation between Plains GP and International Seaways
Given the investment horizon of 90 days Plains GP Holdings is expected to generate 1.01 times more return on investment than International Seaways. However, Plains GP is 1.01 times more volatile than International Seaways. It trades about 0.35 of its potential returns per unit of risk. International Seaways is currently generating about -0.26 per unit of risk. If you would invest 1,734 in Plains GP Holdings on August 31, 2024 and sell it today you would earn a total of 213.00 from holding Plains GP Holdings or generate 12.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Plains GP Holdings vs. International Seaways
Performance |
| Timeline |
| Plains GP Holdings |
| International Seaways |
Plains GP and International Seaways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plains GP and International Seaways
The main advantage of trading using opposite Plains GP and International Seaways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plains GP position performs unexpectedly, International Seaways 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 International Seaways will offset losses from the drop in International Seaways' long position.| Plains GP vs. International Seaways | Plains GP vs. Ardmore Shpng | Plains GP vs. Aquagold International | Plains GP vs. Thrivent High Yield |
| International Seaways vs. Teekay Tankers | International Seaways vs. Frontline | International Seaways vs. DHT Holdings | International Seaways 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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