Correlation Between Martin Midstream and Tsakos Energy

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

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

Diversification Opportunities for Martin Midstream and Tsakos Energy

0.88

Correlation Coefficient

Martin Midstream  Tsakos Energy

Very poor diversification

The 3 months correlation between Martin and Tsakos is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Martin Midstream Partners 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 Martin 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 Martin Midstream Partners 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 Martin Midstream i.e., Martin Midstream and Tsakos Energy go up and down completely randomly.

Pair Corralation between Martin Midstream and Tsakos Energy

Given the investment horizon of 90 days Martin Midstream Partners is expected to generate 9.5 times more return on investment than Tsakos Energy. However, Martin Midstream is 9.5 times more volatile than Tsakos Energy Navigation. It trades about 0.18 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  260.00  in Martin Midstream Partners on March 13, 2024 and sell it today you would earn a total of  74.00  from holding Martin Midstream Partners or generate 28.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.41%
Values	Daily Returns

Martin Midstream Partners  vs.  Tsakos Energy Navigation

Martin Midstream Partners

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Martin Midstream Partners are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain essential indicators, Martin Midstream reported 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 Martin Midstream and Tsakos Energy

The main advantage of trading using opposite Martin Midstream and Tsakos Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Midstream 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 Martin Midstream Partners 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.

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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.