Correlation Between Costamare and TOP Ships
Can any of the company-specific risk be diversified away by investing in both Costamare and TOP Ships 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 TOP Ships into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Costamare and TOP Ships, you can compare the effects of market volatilities on Costamare and TOP Ships 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 TOP Ships. Check out your portfolio center. Please also check ongoing floating volatility patterns of Costamare and TOP Ships.
Diversification Opportunities for Costamare and TOP Ships
Average diversification
The 3 months correlation between Costamare and TOP is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Costamare and TOP Ships in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TOP Ships 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 TOP Ships. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TOP Ships has no effect on the direction of Costamare i.e., Costamare and TOP Ships go up and down completely randomly.
Pair Corralation between Costamare and TOP Ships
Given the investment horizon of 90 days Costamare is expected to generate 13.4 times less return on investment than TOP Ships. But when comparing it to its historical volatility, Costamare is 20.11 times less risky than TOP Ships. It trades about 0.06 of its potential returns per unit of risk. TOP Ships is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,640 in TOP Ships on August 24, 2024 and sell it today you would lose (1,860) from holding TOP Ships or give up 70.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Costamare vs. TOP Ships
Performance |
| Timeline |
| Costamare |
| TOP Ships |
Costamare and TOP Ships Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Costamare and TOP Ships
The main advantage of trading using opposite Costamare and TOP Ships positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Costamare position performs unexpectedly, TOP Ships 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 TOP Ships will offset losses from the drop in TOP Ships' long position.| Costamare vs. Global Ship Lease | Costamare vs. Navios Maritime Partners | Costamare vs. Genco Shipping Trading | Costamare vs. Danaos |
| TOP Ships vs. United Maritime | TOP Ships vs. Globus Maritime | TOP Ships vs. Castor Maritime | TOP Ships vs. Safe Bulkers |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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