Correlation Between Cool and Eagle Bulk
Can any of the company-specific risk be diversified away by investing in both Cool and Eagle Bulk 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 Cool and Eagle Bulk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cool Company and Eagle Bulk Shipping, you can compare the effects of market volatilities on Cool and Eagle Bulk 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 Cool with a short position of Eagle Bulk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cool and Eagle Bulk.
Diversification Opportunities for Cool and Eagle Bulk
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cool and Eagle is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cool Company and Eagle Bulk Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eagle Bulk Shipping and Cool 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 Cool Company are associated (or correlated) with Eagle Bulk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eagle Bulk Shipping has no effect on the direction of Cool i.e., Cool and Eagle Bulk go up and down completely randomly.
Pair Corralation between Cool and Eagle Bulk
If you would invest 795.00 in Cool Company on November 1, 2024 and sell it today you would earn a total of 76.00 from holding Cool Company or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 5.0% |
| Values | Daily Returns |
Cool Company vs. Eagle Bulk Shipping
Performance |
| Timeline |
| Cool Company |
| Eagle Bulk Shipping |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cool and Eagle Bulk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cool and Eagle Bulk
The main advantage of trading using opposite Cool and Eagle Bulk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cool position performs unexpectedly, Eagle Bulk 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 Eagle Bulk will offset losses from the drop in Eagle Bulk's long position.The idea behind Cool Company and Eagle Bulk Shipping 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.| Eagle Bulk vs. Star Bulk Carriers | Eagle Bulk vs. Golden Ocean Group | Eagle Bulk vs. Global Ship Lease | Eagle Bulk vs. Diana Shipping |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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