Correlation Between 2020 Bulkers and FLEX LNG
Can any of the company-specific risk be diversified away by investing in both 2020 Bulkers and FLEX LNG 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 2020 Bulkers and FLEX LNG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2020 Bulkers and FLEX LNG, you can compare the effects of market volatilities on 2020 Bulkers and FLEX LNG 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 2020 Bulkers with a short position of FLEX LNG. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2020 Bulkers and FLEX LNG.
Diversification Opportunities for 2020 Bulkers and FLEX LNG
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 2020 and FLEX is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding 2020 Bulkers and FLEX LNG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLEX LNG and 2020 Bulkers 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 2020 Bulkers are associated (or correlated) with FLEX LNG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLEX LNG has no effect on the direction of 2020 Bulkers i.e., 2020 Bulkers and FLEX LNG go up and down completely randomly.
Pair Corralation between 2020 Bulkers and FLEX LNG
Assuming the 90 days trading horizon 2020 Bulkers is expected to generate 2.19 times less return on investment than FLEX LNG. In addition to that, 2020 Bulkers is 1.2 times more volatile than FLEX LNG. It trades about 0.05 of its total potential returns per unit of risk. FLEX LNG is currently generating about 0.12 per unit of volatility. If you would invest 26,930 in FLEX LNG on August 28, 2024 and sell it today you would earn a total of 1,370 from holding FLEX LNG or generate 5.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
2020 Bulkers vs. FLEX LNG
Performance |
| Timeline |
| 2020 Bulkers |
| FLEX LNG |
2020 Bulkers and FLEX LNG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2020 Bulkers and FLEX LNG
The main advantage of trading using opposite 2020 Bulkers and FLEX LNG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2020 Bulkers position performs unexpectedly, FLEX LNG 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 FLEX LNG will offset losses from the drop in FLEX LNG's long position.| 2020 Bulkers vs. Shelf Drilling | 2020 Bulkers vs. Solstad Offsho | 2020 Bulkers vs. Eidesvik Offshore ASA | 2020 Bulkers vs. Elkem ASA |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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