Correlation Between Teekay and Alliance Resource
Can any of the company-specific risk be diversified away by investing in both Teekay and Alliance Resource 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 Teekay and Alliance Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teekay and Alliance Resource Partners, you can compare the effects of market volatilities on Teekay and Alliance Resource 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 Teekay with a short position of Alliance Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teekay and Alliance Resource.
Diversification Opportunities for Teekay and Alliance Resource
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teekay and Alliance is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Teekay and Alliance Resource Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Resource and Teekay 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 Teekay are associated (or correlated) with Alliance Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Resource has no effect on the direction of Teekay i.e., Teekay and Alliance Resource go up and down completely randomly.
Pair Corralation between Teekay and Alliance Resource
Allowing for the 90-day total investment horizon Teekay is expected to under-perform the Alliance Resource. In addition to that, Teekay is 1.63 times more volatile than Alliance Resource Partners. It trades about -0.08 of its total potential returns per unit of risk. Alliance Resource Partners is currently generating about 0.14 per unit of volatility. If you would invest 2,231 in Alliance Resource Partners on September 2, 2024 and sell it today you would earn a total of 592.00 from holding Alliance Resource Partners or generate 26.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teekay vs. Alliance Resource Partners
Performance |
| Timeline |
| Teekay |
| Alliance Resource |
Teekay and Alliance Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teekay and Alliance Resource
The main advantage of trading using opposite Teekay and Alliance Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teekay position performs unexpectedly, Alliance Resource 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 Alliance Resource will offset losses from the drop in Alliance Resource's long position.| Teekay vs. Teekay Tankers | Teekay vs. DHT Holdings | Teekay vs. Frontline | Teekay vs. International Seaways |
| Alliance Resource vs. Peabody Energy Corp | Alliance Resource vs. Natural Resource Partners | Alliance Resource vs. Hallador Energy | Alliance Resource vs. NACCO Industries |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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