Correlation Between Global Ship and EDISON INTL
Can any of the company-specific risk be diversified away by investing in both Global Ship and EDISON INTL 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 Global Ship and EDISON INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and EDISON INTL, you can compare the effects of market volatilities on Global Ship and EDISON INTL 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 Global Ship with a short position of EDISON INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and EDISON INTL.
Diversification Opportunities for Global Ship and EDISON INTL
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and EDISON is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and EDISON INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EDISON INTL and Global Ship 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 Global Ship Lease are associated (or correlated) with EDISON INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EDISON INTL has no effect on the direction of Global Ship i.e., Global Ship and EDISON INTL go up and down completely randomly.
Pair Corralation between Global Ship and EDISON INTL
Assuming the 90 days horizon Global Ship Lease is expected to generate 1.91 times more return on investment than EDISON INTL. However, Global Ship is 1.91 times more volatile than EDISON INTL. It trades about 0.06 of its potential returns per unit of risk. EDISON INTL is currently generating about 0.08 per unit of risk. If you would invest 1,365 in Global Ship Lease on September 13, 2024 and sell it today you would earn a total of 715.00 from holding Global Ship Lease or generate 52.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. EDISON INTL
Performance |
| Timeline |
| Global Ship Lease |
| EDISON INTL |
Global Ship and EDISON INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and EDISON INTL
The main advantage of trading using opposite Global Ship and EDISON INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, EDISON INTL 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 EDISON INTL will offset losses from the drop in EDISON INTL's long position.| Global Ship vs. Superior Plus Corp | Global Ship vs. SIVERS SEMICONDUCTORS AB | Global Ship vs. CHINA HUARONG ENERHD 50 | Global Ship vs. NORDIC HALIBUT AS |
| EDISON INTL vs. MUTUIONLINE | EDISON INTL vs. Global Ship Lease | EDISON INTL vs. MTI WIRELESS EDGE | EDISON INTL vs. Gruppo Mutuionline SpA |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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