Correlation Between Danaos and Diana Shipping
Can any of the company-specific risk be diversified away by investing in both Danaos and Diana Shipping 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 Danaos and Diana Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danaos and Diana Shipping, you can compare the effects of market volatilities on Danaos and Diana Shipping 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 Danaos with a short position of Diana Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danaos and Diana Shipping.
Diversification Opportunities for Danaos and Diana Shipping
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Danaos and Diana is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Danaos and Diana Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diana Shipping and Danaos 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 Danaos are associated (or correlated) with Diana Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diana Shipping has no effect on the direction of Danaos i.e., Danaos and Diana Shipping go up and down completely randomly.
Pair Corralation between Danaos and Diana Shipping
Considering the 90-day investment horizon Danaos is expected to generate 0.62 times more return on investment than Diana Shipping. However, Danaos is 1.61 times less risky than Diana Shipping. It trades about -0.01 of its potential returns per unit of risk. Diana Shipping is currently generating about -0.09 per unit of risk. If you would invest 8,554 in Danaos on November 18, 2024 and sell it today you would lose (157.00) from holding Danaos or give up 1.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danaos vs. Diana Shipping
Performance |
| Timeline |
| Danaos |
| Diana Shipping |
Danaos and Diana Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danaos and Diana Shipping
The main advantage of trading using opposite Danaos and Diana Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaos position performs unexpectedly, Diana Shipping 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 Diana Shipping will offset losses from the drop in Diana Shipping's long position.| Danaos vs. Genco Shipping Trading | Danaos vs. Costamare | Danaos vs. Ardmore Shpng | Danaos vs. Global Ship Lease |
| Diana Shipping vs. Star Bulk Carriers | Diana Shipping vs. Golden Ocean Group | Diana Shipping vs. Global Ship Lease | Diana Shipping vs. Genco Shipping Trading |
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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