Correlation Between Teekay Tankers and International Seaways

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Can any of the company-specific risk be diversified away by investing in both Teekay Tankers and International Seaways 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 International Seaways into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teekay Tankers and International Seaways, you can compare the effects of market volatilities on Teekay Tankers and International Seaways 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 International Seaways. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teekay Tankers and International Seaways.

Diversification Opportunities for Teekay Tankers and International Seaways

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Teekay and International is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Teekay Tankers and International Seaways in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Seaways 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 International Seaways. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Seaways has no effect on the direction of Teekay Tankers i.e., Teekay Tankers and International Seaways go up and down completely randomly.

Pair Corralation between Teekay Tankers and International Seaways

Considering the 90-day investment horizon Teekay Tankers is expected to generate 1.16 times more return on investment than International Seaways. However, Teekay Tankers is 1.16 times more volatile than International Seaways. It trades about 0.05 of its potential returns per unit of risk. International Seaways is currently generating about 0.04 per unit of risk. If you would invest  2,715  in Teekay Tankers on October 21, 2024 and sell it today you would earn a total of  1,645  from holding Teekay Tankers or generate 60.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Teekay Tankers  vs.  International Seaways

 Performance 
       Timeline  
Teekay Tankers 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Teekay Tankers has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.
International Seaways 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days International Seaways has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Teekay Tankers and International Seaways Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Teekay Tankers and International Seaways

The main advantage of trading using opposite Teekay Tankers and International Seaways positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teekay Tankers position performs unexpectedly, International Seaways 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 International Seaways will offset losses from the drop in International Seaways' long position.
The idea behind Teekay Tankers and International Seaways 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.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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