Correlation Between EuroDry and Navios Maritime
Can any of the company-specific risk be diversified away by investing in both EuroDry and Navios Maritime 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 Navios Maritime into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EuroDry and Navios Maritime Partners, you can compare the effects of market volatilities on EuroDry and Navios Maritime 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 Navios Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of EuroDry and Navios Maritime.
Diversification Opportunities for EuroDry and Navios Maritime
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between EuroDry and Navios is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding EuroDry and Navios Maritime Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Navios Maritime Partners 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 Navios Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Navios Maritime Partners has no effect on the direction of EuroDry i.e., EuroDry and Navios Maritime go up and down completely randomly.
Pair Corralation between EuroDry and Navios Maritime
Given the investment horizon of 90 days EuroDry is expected to generate 1.57 times more return on investment than Navios Maritime. However, EuroDry is 1.57 times more volatile than Navios Maritime Partners. It trades about 0.04 of its potential returns per unit of risk. Navios Maritime Partners is currently generating about -0.28 per unit of risk. If you would invest 1,135 in EuroDry on November 3, 2024 and sell it today you would earn a total of 14.00 from holding EuroDry or generate 1.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
EuroDry vs. Navios Maritime Partners
Performance |
| Timeline |
| EuroDry |
| Navios Maritime Partners |
EuroDry and Navios Maritime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EuroDry and Navios Maritime
The main advantage of trading using opposite EuroDry and Navios Maritime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EuroDry position performs unexpectedly, Navios Maritime 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 Navios Maritime will offset losses from the drop in Navios Maritime's long position.The idea behind EuroDry and Navios Maritime Partners pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Navios Maritime vs. Global Ship Lease | Navios Maritime vs. Costamare | Navios Maritime vs. Genco Shipping Trading | Navios Maritime 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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