Correlation Between Diana Shipping and VanEck Steel
Can any of the company-specific risk be diversified away by investing in both Diana Shipping and VanEck Steel 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 VanEck Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diana Shipping and VanEck Steel ETF, you can compare the effects of market volatilities on Diana Shipping and VanEck Steel 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 VanEck Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diana Shipping and VanEck Steel.
Diversification Opportunities for Diana Shipping and VanEck Steel
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Diana and VanEck is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Diana Shipping and VanEck Steel ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VanEck Steel ETF 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 VanEck Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VanEck Steel ETF has no effect on the direction of Diana Shipping i.e., Diana Shipping and VanEck Steel go up and down completely randomly.
Pair Corralation between Diana Shipping and VanEck Steel
Considering the 90-day investment horizon Diana Shipping is expected to under-perform the VanEck Steel. In addition to that, Diana Shipping is 1.68 times more volatile than VanEck Steel ETF. It trades about -0.3 of its total potential returns per unit of risk. VanEck Steel ETF is currently generating about 0.12 per unit of volatility. If you would invest 6,782 in VanEck Steel ETF on August 31, 2024 and sell it today you would earn a total of 316.00 from holding VanEck Steel ETF or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diana Shipping vs. VanEck Steel ETF
Performance |
| Timeline |
| Diana Shipping |
| VanEck Steel ETF |
Diana Shipping and VanEck Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diana Shipping and VanEck Steel
The main advantage of trading using opposite Diana Shipping and VanEck Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diana Shipping position performs unexpectedly, VanEck Steel 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 VanEck Steel will offset losses from the drop in VanEck Steel'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 |
| VanEck Steel vs. SPDR SP Metals | VanEck Steel vs. VanEck Agribusiness ETF | VanEck Steel vs. Invesco DB Base | VanEck Steel vs. Invesco DB Agriculture |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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