Correlation Between EuroDry and Kirby
Can any of the company-specific risk be diversified away by investing in both EuroDry and Kirby 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 Kirby into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EuroDry and Kirby, you can compare the effects of market volatilities on EuroDry and Kirby 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 Kirby. Check out your portfolio center. Please also check ongoing floating volatility patterns of EuroDry and Kirby.
Diversification Opportunities for EuroDry and Kirby
Excellent diversification
The 3 months correlation between EuroDry and Kirby is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding EuroDry and Kirby in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirby 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 Kirby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirby has no effect on the direction of EuroDry i.e., EuroDry and Kirby go up and down completely randomly.
Pair Corralation between EuroDry and Kirby
Given the investment horizon of 90 days EuroDry is expected to under-perform the Kirby. But the stock apears to be less risky and, when comparing its historical volatility, EuroDry is 1.09 times less risky than Kirby. The stock trades about -0.6 of its potential returns per unit of risk. The Kirby is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 12,478 in Kirby on August 27, 2024 and sell it today you would earn a total of 352.00 from holding Kirby or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
EuroDry vs. Kirby
Performance |
| Timeline |
| EuroDry |
| Kirby |
EuroDry and Kirby Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EuroDry and Kirby
The main advantage of trading using opposite EuroDry and Kirby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EuroDry position performs unexpectedly, Kirby 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 Kirby will offset losses from the drop in Kirby's long position.| EuroDry vs. Star Bulk Carriers | EuroDry vs. TOP Ships | EuroDry vs. Seanergy Maritime Holdings | EuroDry vs. Performance Shipping |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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