Correlation Between Scorpio Tankers and FLEX LNG
Can any of the company-specific risk be diversified away by investing in both Scorpio Tankers and FLEX 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 Scorpio Tankers and FLEX LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scorpio Tankers and FLEX LNG, you can compare the effects of market volatilities on Scorpio Tankers and FLEX 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 Scorpio Tankers with a short position of FLEX LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scorpio Tankers and FLEX LNG.
Diversification Opportunities for Scorpio Tankers and FLEX LNG
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Scorpio and FLEX is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Scorpio Tankers and FLEX LNG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLEX LNG and Scorpio Tankers 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 Scorpio Tankers are associated (or correlated) with FLEX LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLEX LNG has no effect on the direction of Scorpio Tankers i.e., Scorpio Tankers and FLEX LNG go up and down completely randomly.
Pair Corralation between Scorpio Tankers and FLEX LNG
Given the investment horizon of 90 days Scorpio Tankers is expected to under-perform the FLEX LNG. In addition to that, Scorpio Tankers is 1.98 times more volatile than FLEX LNG. It trades about -0.04 of its total potential returns per unit of risk. FLEX LNG is currently generating about 0.15 per unit of volatility. If you would invest 2,428 in FLEX LNG on November 2, 2024 and sell it today you would earn a total of 136.00 from holding FLEX LNG or generate 5.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scorpio Tankers vs. FLEX LNG
Performance |
| Timeline |
| Scorpio Tankers |
| FLEX LNG |
Scorpio Tankers and FLEX LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scorpio Tankers and FLEX LNG
The main advantage of trading using opposite Scorpio Tankers and FLEX LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scorpio Tankers position performs unexpectedly, FLEX 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 FLEX LNG will offset losses from the drop in FLEX LNG's long position.| Scorpio Tankers vs. Teekay Tankers | Scorpio Tankers vs. Navigator Holdings | Scorpio Tankers vs. DHT Holdings | Scorpio Tankers vs. Frontline |
| FLEX LNG vs. Frontline | FLEX LNG vs. Torm PLC Class | FLEX LNG vs. Navigator Holdings | FLEX LNG vs. Teekay 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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