Correlation Between Diana Shipping and Star Bulk
Can any of the company-specific risk be diversified away by investing in both Diana Shipping and Star Bulk 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 Star Bulk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diana Shipping and Star Bulk Carriers, you can compare the effects of market volatilities on Diana Shipping and Star Bulk 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 Star Bulk. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diana Shipping and Star Bulk.
Diversification Opportunities for Diana Shipping and Star Bulk
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Diana and Star is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Diana Shipping and Star Bulk Carriers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Bulk Carriers 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 Star Bulk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Bulk Carriers has no effect on the direction of Diana Shipping i.e., Diana Shipping and Star Bulk go up and down completely randomly.
Pair Corralation between Diana Shipping and Star Bulk
Considering the 90-day investment horizon Diana Shipping is expected to generate 1.11 times more return on investment than Star Bulk. However, Diana Shipping is 1.11 times more volatile than Star Bulk Carriers. It trades about -0.16 of its potential returns per unit of risk. Star Bulk Carriers is currently generating about -0.24 per unit of risk. If you would invest 248.00 in Diana Shipping on August 26, 2024 and sell it today you would lose (34.00) from holding Diana Shipping or give up 13.71% 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. Star Bulk Carriers
Performance |
| Timeline |
| Diana Shipping |
| Star Bulk Carriers |
Diana Shipping and Star Bulk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diana Shipping and Star Bulk
The main advantage of trading using opposite Diana Shipping and Star Bulk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diana Shipping position performs unexpectedly, Star Bulk 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 Star Bulk will offset losses from the drop in Star Bulk'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 |
| Star Bulk vs. Genco Shipping Trading | Star Bulk vs. Diana Shipping | Star Bulk vs. Danaos | Star Bulk vs. Golden Ocean Group |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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