Correlation Between EuroDry and Genco Shipping
Can any of the company-specific risk be diversified away by investing in both EuroDry and Genco Shipping 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 EuroDry and Genco Shipping into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EuroDry and Genco Shipping Trading, you can compare the effects of market volatilities on EuroDry and Genco Shipping 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 EuroDry with a short position of Genco Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of EuroDry and Genco Shipping.
Diversification Opportunities for EuroDry and Genco Shipping
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between EuroDry and Genco is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding EuroDry and Genco Shipping Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genco Shipping Trading and EuroDry 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 EuroDry are associated (or correlated) with Genco Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genco Shipping Trading has no effect on the direction of EuroDry i.e., EuroDry and Genco Shipping go up and down completely randomly.
Pair Corralation between EuroDry and Genco Shipping
Given the investment horizon of 90 days EuroDry is expected to generate 6.41 times less return on investment than Genco Shipping. But when comparing it to its historical volatility, EuroDry is 1.01 times less risky than Genco Shipping. It trades about 0.01 of its potential returns per unit of risk. Genco Shipping Trading is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,245 in Genco Shipping Trading on August 27, 2024 and sell it today you would earn a total of 441.00 from holding Genco Shipping Trading or generate 35.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EuroDry vs. Genco Shipping Trading
Performance |
| Timeline |
| EuroDry |
| Genco Shipping Trading |
EuroDry and Genco Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EuroDry and Genco Shipping
The main advantage of trading using opposite EuroDry and Genco Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EuroDry position performs unexpectedly, Genco Shipping 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 Genco Shipping will offset losses from the drop in Genco Shipping's long position.| EuroDry vs. Star Bulk Carriers | EuroDry vs. TOP Ships | EuroDry vs. Seanergy Maritime Holdings | EuroDry vs. Performance Shipping |
| Genco Shipping vs. Star Bulk Carriers | Genco Shipping vs. Golden Ocean Group | Genco Shipping vs. Global Ship Lease | Genco Shipping vs. Danaos |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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