Correlation Between Costamare and Pacific Basin
Can any of the company-specific risk be diversified away by investing in both Costamare and Pacific Basin 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 Costamare and Pacific Basin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costamare and Pacific Basin Shipping, you can compare the effects of market volatilities on Costamare and Pacific Basin 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 Costamare with a short position of Pacific Basin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costamare and Pacific Basin.
Diversification Opportunities for Costamare and Pacific Basin
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Costamare and Pacific is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Costamare and Pacific Basin Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Basin Shipping and Costamare 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 Costamare are associated (or correlated) with Pacific Basin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Basin Shipping has no effect on the direction of Costamare i.e., Costamare and Pacific Basin go up and down completely randomly.
Pair Corralation between Costamare and Pacific Basin
Given the investment horizon of 90 days Costamare is expected to generate 1.44 times less return on investment than Pacific Basin. But when comparing it to its historical volatility, Costamare is 2.76 times less risky than Pacific Basin. It trades about 0.06 of its potential returns per unit of risk. Pacific Basin Shipping is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Pacific Basin Shipping on August 24, 2024 and sell it today you would lose (1.00) from holding Pacific Basin Shipping or give up 3.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.32% |
| Values | Daily Returns |
Costamare vs. Pacific Basin Shipping
Performance |
| Timeline |
| Costamare |
| Pacific Basin Shipping |
Costamare and Pacific Basin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costamare and Pacific Basin
The main advantage of trading using opposite Costamare and Pacific Basin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costamare position performs unexpectedly, Pacific Basin 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 Pacific Basin will offset losses from the drop in Pacific Basin's long position.| Costamare vs. Global Ship Lease | Costamare vs. Navios Maritime Partners | Costamare vs. Genco Shipping Trading | Costamare vs. Danaos |
| Pacific Basin vs. American Shipping | Pacific Basin vs. EuroDry | Pacific Basin vs. Nippon Yusen Kabushiki | Pacific Basin vs. Euroseas |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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