Correlation Between Targa Resources and Teekay Tankers
Can any of the company-specific risk be diversified away by investing in both Targa Resources and Teekay Tankers 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 Tankers 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 Tankers, you can compare the effects of market volatilities on Targa Resources and Teekay Tankers 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 Tankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Targa Resources and Teekay Tankers.
Diversification Opportunities for Targa Resources and Teekay Tankers
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Targa and Teekay is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Targa Resources and Teekay Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay Tankers 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 Tankers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teekay Tankers has no effect on the direction of Targa Resources i.e., Targa Resources and Teekay Tankers go up and down completely randomly.
Pair Corralation between Targa Resources and Teekay Tankers
Given the investment horizon of 90 days Targa Resources is expected to generate 0.38 times more return on investment than Teekay Tankers. However, Targa Resources is 2.64 times less risky than Teekay Tankers. It trades about 0.92 of its potential returns per unit of risk. Teekay Tankers is currently generating about 0.26 per unit of risk. If you would invest 17,253 in Targa Resources on October 20, 2024 and sell it today you would earn a total of 4,319 from holding Targa Resources or generate 25.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Targa Resources vs. Teekay Tankers
Performance |
| Timeline |
| Targa Resources |
| Teekay Tankers |
Targa Resources and Teekay Tankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Targa Resources and Teekay Tankers
The main advantage of trading using opposite Targa Resources and Teekay Tankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Targa Resources position performs unexpectedly, Teekay Tankers 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 Tankers will offset losses from the drop in Teekay Tankers' 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 |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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