Correlation Between Scorpio Tankers and SFL
Can any of the company-specific risk be diversified away by investing in both Scorpio Tankers and SFL 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 SFL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scorpio Tankers and SFL Corporation, you can compare the effects of market volatilities on Scorpio Tankers and SFL 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 SFL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scorpio Tankers and SFL.
Diversification Opportunities for Scorpio Tankers and SFL
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Scorpio and SFL is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Scorpio Tankers and SFL Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SFL Corporation 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 SFL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SFL Corporation has no effect on the direction of Scorpio Tankers i.e., Scorpio Tankers and SFL go up and down completely randomly.
Pair Corralation between Scorpio Tankers and SFL
Given the investment horizon of 90 days Scorpio Tankers is expected to generate 0.88 times more return on investment than SFL. However, Scorpio Tankers is 1.14 times less risky than SFL. It trades about -0.43 of its potential returns per unit of risk. SFL Corporation is currently generating about -0.39 per unit of risk. If you would invest 4,815 in Scorpio Tankers on December 8, 2024 and sell it today you would lose (849.00) from holding Scorpio Tankers or give up 17.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Scorpio Tankers vs. SFL Corp.
Performance |
| Timeline |
| Scorpio Tankers |
| SFL Corporation |
Scorpio Tankers and SFL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Scorpio Tankers and SFL
The main advantage of trading using opposite Scorpio Tankers and SFL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scorpio Tankers position performs unexpectedly, SFL 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 SFL will offset losses from the drop in SFL's long position.| Scorpio Tankers vs. Teekay Tankers | Scorpio Tankers vs. Navigator Holdings | Scorpio Tankers vs. DHT Holdings | Scorpio Tankers vs. Frontline |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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