Correlation Between EuroDry and Nippon Yusen
Can any of the company-specific risk be diversified away by investing in both EuroDry and Nippon Yusen 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 Nippon Yusen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EuroDry and Nippon Yusen Kabushiki, you can compare the effects of market volatilities on EuroDry and Nippon Yusen 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 Nippon Yusen. Check out your portfolio center. Please also check ongoing floating volatility patterns of EuroDry and Nippon Yusen.
Diversification Opportunities for EuroDry and Nippon Yusen
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between EuroDry and Nippon is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding EuroDry and Nippon Yusen Kabushiki in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Yusen Kabushiki 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 Nippon Yusen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Yusen Kabushiki has no effect on the direction of EuroDry i.e., EuroDry and Nippon Yusen go up and down completely randomly.
Pair Corralation between EuroDry and Nippon Yusen
Given the investment horizon of 90 days EuroDry is expected to under-perform the Nippon Yusen. But the stock apears to be less risky and, when comparing its historical volatility, EuroDry is 1.04 times less risky than Nippon Yusen. The stock trades about -0.16 of its potential returns per unit of risk. The Nippon Yusen Kabushiki is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 662.00 in Nippon Yusen Kabushiki on August 31, 2024 and sell it today you would lose (37.00) from holding Nippon Yusen Kabushiki or give up 5.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.21% |
| Values | Daily Returns |
EuroDry vs. Nippon Yusen Kabushiki
Performance |
| Timeline |
| EuroDry |
| Nippon Yusen Kabushiki |
EuroDry and Nippon Yusen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EuroDry and Nippon Yusen
The main advantage of trading using opposite EuroDry and Nippon Yusen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EuroDry position performs unexpectedly, Nippon Yusen 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 Nippon Yusen will offset losses from the drop in Nippon Yusen's long position.| EuroDry vs. Safe Bulkers | EuroDry vs. Safe Bulkers | EuroDry vs. Diana Shipping | EuroDry vs. Genco Shipping Trading |
| Nippon Yusen vs. Hapag Lloyd Aktiengesellschaft | Nippon Yusen vs. Hapag Lloyd Aktiengesellschaft | Nippon Yusen vs. AP Moeller Maersk AS | Nippon Yusen vs. AP Mller |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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