Correlation Between Capital Product and EuroDry
Can any of the company-specific risk be diversified away by investing in both Capital Product and EuroDry 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 Capital Product and EuroDry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital Product Partners and EuroDry, you can compare the effects of market volatilities on Capital Product and EuroDry 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 Capital Product with a short position of EuroDry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Product and EuroDry.
Diversification Opportunities for Capital Product and EuroDry
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Capital and EuroDry is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Capital Product Partners and EuroDry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EuroDry and Capital Product 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 Capital Product Partners are associated (or correlated) with EuroDry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EuroDry has no effect on the direction of Capital Product i.e., Capital Product and EuroDry go up and down completely randomly.
Pair Corralation between Capital Product and EuroDry
Given the investment horizon of 90 days Capital Product Partners is expected to under-perform the EuroDry. In addition to that, Capital Product is 2.79 times more volatile than EuroDry. It trades about -0.03 of its total potential returns per unit of risk. EuroDry is currently generating about 0.0 per unit of volatility. If you would invest 1,593 in EuroDry on August 27, 2024 and sell it today you would lose (183.00) from holding EuroDry or give up 11.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 87.3% |
| Values | Daily Returns |
Capital Product Partners vs. EuroDry
Performance |
| Timeline |
| Capital Product Partners |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| EuroDry |
Capital Product and EuroDry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Product and EuroDry
The main advantage of trading using opposite Capital Product and EuroDry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Product position performs unexpectedly, EuroDry 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 EuroDry will offset losses from the drop in EuroDry's long position.| Capital Product vs. Danaos | Capital Product vs. Global Ship Lease | Capital Product vs. Euroseas | Capital Product vs. Navios Maritime Partners |
| EuroDry vs. Star Bulk Carriers | EuroDry vs. TOP Ships | EuroDry vs. Seanergy Maritime Holdings | EuroDry vs. Performance 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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