Correlation Between Teekay Tankers and Global Partners
Can any of the company-specific risk be diversified away by investing in both Teekay Tankers and Global Partners 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 Tankers and Global Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teekay Tankers and Global Partners LP, you can compare the effects of market volatilities on Teekay Tankers and Global Partners 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 Tankers with a short position of Global Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teekay Tankers and Global Partners.
Diversification Opportunities for Teekay Tankers and Global Partners
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teekay and Global is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Teekay Tankers and Global Partners LP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Partners LP and Teekay 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 Teekay Tankers are associated (or correlated) with Global Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Partners LP has no effect on the direction of Teekay Tankers i.e., Teekay Tankers and Global Partners go up and down completely randomly.
Pair Corralation between Teekay Tankers and Global Partners
Considering the 90-day investment horizon Teekay Tankers is expected to under-perform the Global Partners. But the stock apears to be less risky and, when comparing its historical volatility, Teekay Tankers is 1.05 times less risky than Global Partners. The stock trades about -0.04 of its potential returns per unit of risk. The Global Partners LP is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,244 in Global Partners LP on November 3, 2024 and sell it today you would earn a total of 1,174 from holding Global Partners LP or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teekay Tankers vs. Global Partners LP
Performance |
| Timeline |
| Teekay Tankers |
| Global Partners LP |
Teekay Tankers and Global Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teekay Tankers and Global Partners
The main advantage of trading using opposite Teekay Tankers and Global Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teekay Tankers position performs unexpectedly, Global Partners 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 Global Partners will offset losses from the drop in Global Partners' long position.The idea behind Teekay Tankers and Global Partners LP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Global Partners vs. Plains All American | Global Partners vs. Genesis Energy LP | Global Partners vs. Western Midstream Partners | Global Partners vs. Hess Midstream 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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