Correlation Between EuroDry and Oceanpal
Can any of the company-specific risk be diversified away by investing in both EuroDry and Oceanpal 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 Oceanpal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EuroDry and Oceanpal, you can compare the effects of market volatilities on EuroDry and Oceanpal 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 Oceanpal. Check out your portfolio center. Please also check ongoing floating volatility patterns of EuroDry and Oceanpal.
Diversification Opportunities for EuroDry and Oceanpal
Very weak diversification
The 3 months correlation between EuroDry and Oceanpal is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding EuroDry and Oceanpal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oceanpal 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 Oceanpal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oceanpal has no effect on the direction of EuroDry i.e., EuroDry and Oceanpal go up and down completely randomly.
Pair Corralation between EuroDry and Oceanpal
Given the investment horizon of 90 days EuroDry is expected to generate 0.27 times more return on investment than Oceanpal. However, EuroDry is 3.67 times less risky than Oceanpal. It trades about 0.0 of its potential returns per unit of risk. Oceanpal is currently generating about -0.11 per unit of risk. If you would invest 1,630 in EuroDry on August 24, 2024 and sell it today you would lose (177.00) from holding EuroDry or give up 10.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
EuroDry vs. Oceanpal
Performance |
| Timeline |
| EuroDry |
| Oceanpal |
EuroDry and Oceanpal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EuroDry and Oceanpal
The main advantage of trading using opposite EuroDry and Oceanpal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EuroDry position performs unexpectedly, Oceanpal 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 Oceanpal will offset losses from the drop in Oceanpal's long position.| EuroDry vs. Global Ship Lease | EuroDry vs. Costamare | EuroDry vs. Navios Maritime Partners | EuroDry vs. Genco Shipping Trading |
| Oceanpal vs. Genco Shipping Trading | Oceanpal vs. Golden Ocean Group | Oceanpal vs. Star Bulk Carriers | Oceanpal vs. TOP Ships |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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