Correlation Between Targa Resources and Teekay
Can any of the company-specific risk be diversified away by investing in both Targa Resources and Teekay 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 Targa Resources and Teekay into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Targa Resources and Teekay, you can compare the effects of market volatilities on Targa Resources and Teekay 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 Targa Resources with a short position of Teekay. Check out your portfolio center. Please also check ongoing floating volatility patterns of Targa Resources and Teekay.
Diversification Opportunities for Targa Resources and Teekay
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Targa and Teekay is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Targa Resources and Teekay in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay and Targa Resources 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 Targa Resources are associated (or correlated) with Teekay. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teekay has no effect on the direction of Targa Resources i.e., Targa Resources and Teekay go up and down completely randomly.
Pair Corralation between Targa Resources and Teekay
Given the investment horizon of 90 days Targa Resources is expected to generate 0.75 times more return on investment than Teekay. However, Targa Resources is 1.34 times less risky than Teekay. It trades about 0.33 of its potential returns per unit of risk. Teekay is currently generating about -0.03 per unit of risk. If you would invest 18,306 in Targa Resources on November 2, 2024 and sell it today you would earn a total of 2,215 from holding Targa Resources or generate 12.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Targa Resources vs. Teekay
Performance |
| Timeline |
| Targa Resources |
| Teekay |
Targa Resources and Teekay Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Targa Resources and Teekay
The main advantage of trading using opposite Targa Resources and Teekay positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Targa Resources position performs unexpectedly, Teekay 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 Teekay will offset losses from the drop in Teekay's long position.| Targa Resources vs. Plains GP Holdings | Targa Resources vs. Western Midstream Partners | Targa Resources vs. EnLink Midstream LLC | Targa Resources vs. Plains All American |
| Teekay vs. Teekay Tankers | Teekay vs. DHT Holdings | Teekay vs. Frontline | Teekay vs. International Seaways |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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