Correlation Between Teekay Tankers and Martin Midstream
Can any of the company-specific risk be diversified away by investing in both Teekay Tankers and Martin Midstream 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 Martin Midstream into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teekay Tankers and Martin Midstream Partners, you can compare the effects of market volatilities on Teekay Tankers and Martin Midstream 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 Martin Midstream. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teekay Tankers and Martin Midstream.
Diversification Opportunities for Teekay Tankers and Martin Midstream
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Teekay and Martin is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Teekay Tankers and Martin Midstream Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Martin Midstream Partners 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 Martin Midstream. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Martin Midstream Partners has no effect on the direction of Teekay Tankers i.e., Teekay Tankers and Martin Midstream go up and down completely randomly.
Pair Corralation between Teekay Tankers and Martin Midstream
Considering the 90-day investment horizon Teekay Tankers is expected to under-perform the Martin Midstream. But the stock apears to be less risky and, when comparing its historical volatility, Teekay Tankers is 1.08 times less risky than Martin Midstream. The stock trades about -0.05 of its potential returns per unit of risk. The Martin Midstream Partners is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 233.00 in Martin Midstream Partners on August 27, 2024 and sell it today you would earn a total of 164.00 from holding Martin Midstream Partners or generate 70.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teekay Tankers vs. Martin Midstream Partners
Performance |
| Timeline |
| Teekay Tankers |
| Martin Midstream Partners |
Teekay Tankers and Martin Midstream Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teekay Tankers and Martin Midstream
The main advantage of trading using opposite Teekay Tankers and Martin Midstream positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teekay Tankers position performs unexpectedly, Martin Midstream 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 Martin Midstream will offset losses from the drop in Martin Midstream's long position.The idea behind Teekay Tankers and Martin Midstream Partners 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.| Martin Midstream vs. Western Midstream Partners | Martin Midstream vs. EnLink Midstream LLC | Martin Midstream vs. Kinetik Holdings | Martin Midstream vs. NGL 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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