Correlation Between Western Midstream and Teekay Tankers
Can any of the company-specific risk be diversified away by investing in both Western Midstream 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 Western Midstream and Teekay Tankers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Midstream Partners and Teekay Tankers, you can compare the effects of market volatilities on Western Midstream 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 Western Midstream with a short position of Teekay Tankers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Midstream and Teekay Tankers.
Diversification Opportunities for Western Midstream and Teekay Tankers
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Western and Teekay is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Western Midstream Partners and Teekay Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teekay Tankers and Western Midstream 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 Western Midstream Partners 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 Western Midstream i.e., Western Midstream and Teekay Tankers go up and down completely randomly.
Pair Corralation between Western Midstream and Teekay Tankers
Considering the 90-day investment horizon Western Midstream Partners is expected to generate 0.73 times more return on investment than Teekay Tankers. However, Western Midstream Partners is 1.37 times less risky than Teekay Tankers. It trades about 0.04 of its potential returns per unit of risk. Teekay Tankers is currently generating about -0.27 per unit of risk. If you would invest 3,796 in Western Midstream Partners on September 12, 2024 and sell it today you would earn a total of 113.00 from holding Western Midstream Partners or generate 2.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Midstream Partners vs. Teekay Tankers
Performance |
| Timeline |
| Western Midstream |
| Teekay Tankers |
Western Midstream and Teekay Tankers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Midstream and Teekay Tankers
The main advantage of trading using opposite Western Midstream and Teekay Tankers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Midstream 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.| Western Midstream vs. DT Midstream | Western Midstream vs. MPLX LP | Western Midstream vs. Plains All American | Western Midstream vs. Genesis Energy LP |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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