Correlation Between Teekay and DHT Holdings
Can any of the company-specific risk be diversified away by investing in both Teekay and DHT Holdings 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 DHT Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teekay and DHT Holdings, you can compare the effects of market volatilities on Teekay and DHT Holdings 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 DHT Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teekay and DHT Holdings.
Diversification Opportunities for Teekay and DHT Holdings
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Teekay and DHT is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Teekay and DHT Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DHT Holdings 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 DHT Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DHT Holdings has no effect on the direction of Teekay i.e., Teekay and DHT Holdings go up and down completely randomly.
Pair Corralation between Teekay and DHT Holdings
Allowing for the 90-day total investment horizon Teekay is expected to generate 1.22 times more return on investment than DHT Holdings. However, Teekay is 1.22 times more volatile than DHT Holdings. It trades about 0.07 of its potential returns per unit of risk. DHT Holdings is currently generating about 0.03 per unit of risk. If you would invest 340.00 in Teekay on August 23, 2024 and sell it today you would earn a total of 450.00 from holding Teekay or generate 132.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teekay vs. DHT Holdings
Performance |
| Timeline |
| Teekay |
| DHT Holdings |
Teekay and DHT Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teekay and DHT Holdings
The main advantage of trading using opposite Teekay and DHT Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teekay position performs unexpectedly, DHT Holdings 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 DHT Holdings will offset losses from the drop in DHT Holdings' long position.| Teekay vs. Teekay Tankers | Teekay vs. DHT Holdings | Teekay vs. Frontline | Teekay vs. International Seaways |
| DHT Holdings vs. Teekay Tankers | DHT Holdings vs. Frontline | DHT Holdings vs. International Seaways | DHT Holdings 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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