Correlation Between Danaos and Kirby
Can any of the company-specific risk be diversified away by investing in both Danaos and Kirby 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 Kirby into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danaos and Kirby, you can compare the effects of market volatilities on Danaos and Kirby 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 Kirby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danaos and Kirby.
Diversification Opportunities for Danaos and Kirby
Very weak diversification
The 3 months correlation between Danaos and Kirby is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Danaos and Kirby in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirby 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 Kirby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirby has no effect on the direction of Danaos i.e., Danaos and Kirby go up and down completely randomly.
Pair Corralation between Danaos and Kirby
Considering the 90-day investment horizon Danaos is expected to generate 1.17 times less return on investment than Kirby. But when comparing it to its historical volatility, Danaos is 1.06 times less risky than Kirby. It trades about 0.07 of its potential returns per unit of risk. Kirby is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 6,855 in Kirby on August 24, 2024 and sell it today you would earn a total of 5,975 from holding Kirby or generate 87.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danaos vs. Kirby
Performance |
| Timeline |
| Danaos |
| Kirby |
Danaos and Kirby Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danaos and Kirby
The main advantage of trading using opposite Danaos and Kirby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaos position performs unexpectedly, Kirby 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 Kirby will offset losses from the drop in Kirby's long position.| Danaos vs. Genco Shipping Trading | Danaos vs. Costamare | Danaos vs. Ardmore Shpng | Danaos vs. Global Ship Lease |
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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