Correlation Between Scorpio Tankers and International Seaways
Can any of the company-specific risk be diversified away by investing in both Scorpio Tankers 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 Scorpio Tankers and International Seaways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scorpio Tankers and International Seaways, you can compare the effects of market volatilities on Scorpio Tankers 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 Scorpio Tankers with a short position of International Seaways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scorpio Tankers and International Seaways.
Diversification Opportunities for Scorpio Tankers and International Seaways
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Scorpio and International is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Scorpio Tankers and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways 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 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 Scorpio Tankers i.e., Scorpio Tankers and International Seaways go up and down completely randomly.
Pair Corralation between Scorpio Tankers and International Seaways
Given the investment horizon of 90 days Scorpio Tankers is expected to under-perform the International Seaways. In addition to that, Scorpio Tankers is 1.08 times more volatile than International Seaways. It trades about -0.42 of its total potential returns per unit of risk. International Seaways is currently generating about -0.26 per unit of volatility. If you would invest 4,508 in International Seaways on August 24, 2024 and sell it today you would lose (373.00) from holding International Seaways or give up 8.27% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scorpio Tankers vs. International Seaways
Performance |
| Timeline |
| Scorpio Tankers |
| International Seaways |
Scorpio Tankers and International Seaways Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scorpio Tankers and International Seaways
The main advantage of trading using opposite Scorpio Tankers and International Seaways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scorpio Tankers 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.| Scorpio Tankers vs. Teekay Tankers | Scorpio Tankers vs. Navigator Holdings | Scorpio Tankers vs. DHT Holdings | Scorpio Tankers vs. Frontline |
| 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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