Correlation Between Genesis Energy and Tsakos Energy

Can any of the company-specific risk be diversified away by investing in both Genesis Energy and Tsakos Energy 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 Genesis Energy and Tsakos Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Genesis Energy LP and Tsakos Energy Navigation, you can compare the effects of market volatilities on Genesis Energy and Tsakos Energy 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 Genesis Energy with a short position of Tsakos Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genesis Energy and Tsakos Energy.

Diversification Opportunities for Genesis Energy and Tsakos Energy

0.81

Correlation Coefficient

Genesis Energy  Tsakos Energy

Very poor diversification

The 3 months correlation between Genesis and Tsakos is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Genesis Energy LP and Tsakos Energy Navigation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tsakos Energy Navigation and Genesis Energy 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 Genesis Energy LP are associated (or correlated) with Tsakos Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tsakos Energy Navigation has no effect on the direction of Genesis Energy i.e., Genesis Energy and Tsakos Energy go up and down completely randomly.

Pair Corralation between Genesis Energy and Tsakos Energy

Considering the 90-day investment horizon Genesis Energy LP is expected to generate 9.03 times more return on investment than Tsakos Energy. However, Genesis Energy is 9.03 times more volatile than Tsakos Energy Navigation. It trades about 0.17 of its potential returns per unit of risk. Tsakos Energy Navigation is currently generating about 0.25 per unit of risk. If you would invest  1,069  in Genesis Energy LP on March 13, 2024 and sell it today you would earn a total of  265.00  from holding Genesis Energy LP or generate 24.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Genesis Energy LP  vs.  Tsakos Energy Navigation

Genesis Energy LP

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Genesis Energy LP are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite quite uncertain technical and fundamental indicators, Genesis Energy disclosed solid returns over the last few months and may actually be approaching a breakup point.

Tsakos Energy Navigation

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tsakos Energy Navigation are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Tsakos Energy is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Genesis Energy and Tsakos Energy

The main advantage of trading using opposite Genesis Energy and Tsakos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genesis Energy position performs unexpectedly, Tsakos Energy 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 Tsakos Energy will offset losses from the drop in Tsakos Energy's long position.

The idea behind Genesis Energy LP and Tsakos Energy Navigation 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.