Correlation Between Tsakos Energy and NGL Energy
Can any of the company-specific risk be diversified away by investing in both Tsakos Energy and NGL 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 Tsakos Energy and NGL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tsakos Energy Navigation and NGL Energy Partners, you can compare the effects of market volatilities on Tsakos Energy and NGL 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 Tsakos Energy with a short position of NGL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tsakos Energy and NGL Energy.
Diversification Opportunities for Tsakos Energy and NGL Energy
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tsakos and NGL is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Tsakos Energy Navigation and NGL Energy Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGL Energy Partners and Tsakos 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 Tsakos Energy Navigation are associated (or correlated) with NGL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGL Energy Partners has no effect on the direction of Tsakos Energy i.e., Tsakos Energy and NGL Energy go up and down completely randomly.
Pair Corralation between Tsakos Energy and NGL Energy
Assuming the 90 days trading horizon Tsakos Energy Navigation is expected to generate 0.88 times more return on investment than NGL Energy. However, Tsakos Energy Navigation is 1.13 times less risky than NGL Energy. It trades about 0.26 of its potential returns per unit of risk. NGL Energy Partners is currently generating about -0.05 per unit of risk. If you would invest 2,581 in Tsakos Energy Navigation on March 2, 2024 and sell it today you would earn a total of 49.00 from holding Tsakos Energy Navigation or generate 1.9% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 95.45% |
Values | Daily Returns |
Tsakos Energy Navigation vs. NGL Energy Partners
Performance |
Timeline |
Tsakos Energy Navigation |
NGL Energy Partners |
Tsakos Energy and NGL Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Tsakos Energy and NGL Energy
The main advantage of trading using opposite Tsakos Energy and NGL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tsakos Energy position performs unexpectedly, NGL 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 NGL Energy will offset losses from the drop in NGL Energy's long position.Tsakos Energy vs. Tsakos Energy Navigation | Tsakos Energy vs. GasLog Partners LP | Tsakos Energy vs. Dynagas LNG Partners | Tsakos Energy vs. GasLog Partners LP |
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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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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