Correlation Between Diana Shipping and BW LPG
Can any of the company-specific risk be diversified away by investing in both Diana Shipping and BW LPG 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 Diana Shipping and BW LPG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diana Shipping and BW LPG Limited, you can compare the effects of market volatilities on Diana Shipping and BW LPG 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 Diana Shipping with a short position of BW LPG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diana Shipping and BW LPG.
Diversification Opportunities for Diana Shipping and BW LPG
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Diana and BWLP is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Diana Shipping and BW LPG Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BW LPG Limited and Diana Shipping 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 Diana Shipping are associated (or correlated) with BW LPG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BW LPG Limited has no effect on the direction of Diana Shipping i.e., Diana Shipping and BW LPG go up and down completely randomly.
Pair Corralation between Diana Shipping and BW LPG
Considering the 90-day investment horizon Diana Shipping is expected to under-perform the BW LPG. In addition to that, Diana Shipping is 1.35 times more volatile than BW LPG Limited. It trades about -0.38 of its total potential returns per unit of risk. BW LPG Limited is currently generating about -0.08 per unit of volatility. If you would invest 1,280 in BW LPG Limited on September 1, 2024 and sell it today you would lose (53.00) from holding BW LPG Limited or give up 4.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diana Shipping vs. BW LPG Limited
Performance |
| Timeline |
| Diana Shipping |
| BW LPG Limited |
Diana Shipping and BW LPG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diana Shipping and BW LPG
The main advantage of trading using opposite Diana Shipping and BW LPG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diana Shipping position performs unexpectedly, BW LPG 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 BW LPG will offset losses from the drop in BW LPG's long position.| Diana Shipping vs. Star Bulk Carriers | Diana Shipping vs. Golden Ocean Group | Diana Shipping vs. Global Ship Lease | Diana Shipping vs. Genco Shipping Trading |
| BW LPG vs. Procter Gamble | BW LPG vs. ServiceNow | BW LPG vs. Marti Technologies | BW LPG vs. Canlan Ice Sports |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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