Correlation Between Teekay and Energy Transfer
Can any of the company-specific risk be diversified away by investing in both Teekay and Energy Transfer 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 Energy Transfer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teekay and Energy Transfer LP, you can compare the effects of market volatilities on Teekay and Energy Transfer 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 Energy Transfer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teekay and Energy Transfer.
Diversification Opportunities for Teekay and Energy Transfer
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teekay and Energy is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Teekay and Energy Transfer LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Energy Transfer LP 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 Energy Transfer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Energy Transfer LP has no effect on the direction of Teekay i.e., Teekay and Energy Transfer go up and down completely randomly.
Pair Corralation between Teekay and Energy Transfer
Allowing for the 90-day total investment horizon Teekay is expected to under-perform the Energy Transfer. In addition to that, Teekay is 2.63 times more volatile than Energy Transfer LP. It trades about -0.04 of its total potential returns per unit of risk. Energy Transfer LP is currently generating about 0.36 per unit of volatility. If you would invest 1,573 in Energy Transfer LP on August 31, 2024 and sell it today you would earn a total of 369.00 from holding Energy Transfer LP or generate 23.46% 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. Energy Transfer LP
Performance |
| Timeline |
| Teekay |
| Energy Transfer LP |
Teekay and Energy Transfer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teekay and Energy Transfer
The main advantage of trading using opposite Teekay and Energy Transfer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teekay position performs unexpectedly, Energy Transfer 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 Energy Transfer will offset losses from the drop in Energy Transfer's long position.| Teekay vs. Teekay Tankers | Teekay vs. DHT Holdings | Teekay vs. Frontline | Teekay vs. International Seaways |
| Energy Transfer vs. Atlantica Sustainable Infrastructure | Energy Transfer vs. Clearway Energy | Energy Transfer vs. Brookfield Renewable Corp | Energy Transfer vs. Nextera Energy Partners |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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