Correlation Between Diana Shipping and Cool
Can any of the company-specific risk be diversified away by investing in both Diana Shipping and Cool 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 Cool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diana Shipping and Cool Company, you can compare the effects of market volatilities on Diana Shipping and Cool 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 Cool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diana Shipping and Cool.
Diversification Opportunities for Diana Shipping and Cool
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diana and Cool is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Diana Shipping and Cool Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cool Company 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 Cool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cool Company has no effect on the direction of Diana Shipping i.e., Diana Shipping and Cool go up and down completely randomly.
Pair Corralation between Diana Shipping and Cool
Considering the 90-day investment horizon Diana Shipping is expected to under-perform the Cool. But the stock apears to be less risky and, when comparing its historical volatility, Diana Shipping is 1.11 times less risky than Cool. The stock trades about -0.25 of its potential returns per unit of risk. The Cool Company is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest 1,004 in Cool Company on August 31, 2024 and sell it today you would lose (171.00) from holding Cool Company or give up 17.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diana Shipping vs. Cool Company
Performance |
| Timeline |
| Diana Shipping |
| Cool Company |
Diana Shipping and Cool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diana Shipping and Cool
The main advantage of trading using opposite Diana Shipping and Cool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diana Shipping position performs unexpectedly, Cool 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 Cool will offset losses from the drop in Cool'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 |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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