Correlation Between First Ship and I Minerals
Can any of the company-specific risk be diversified away by investing in both First Ship and I Minerals 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 First Ship and I Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Ship Lease and I Minerals, you can compare the effects of market volatilities on First Ship and I Minerals 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 First Ship with a short position of I Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Ship and I Minerals.
Diversification Opportunities for First Ship and I Minerals
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between First and IMAHF is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding First Ship Lease and I Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on I Minerals and First Ship 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 First Ship Lease are associated (or correlated) with I Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of I Minerals has no effect on the direction of First Ship i.e., First Ship and I Minerals go up and down completely randomly.
Pair Corralation between First Ship and I Minerals
Assuming the 90 days horizon First Ship is expected to generate 34.22 times less return on investment than I Minerals. But when comparing it to its historical volatility, First Ship Lease is 20.87 times less risky than I Minerals. It trades about 0.04 of its potential returns per unit of risk. I Minerals is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.00 in I Minerals on September 4, 2024 and sell it today you would earn a total of 0.50 from holding I Minerals or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Ship Lease vs. I Minerals
Performance |
| Timeline |
| First Ship Lease |
| I Minerals |
First Ship and I Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Ship and I Minerals
The main advantage of trading using opposite First Ship and I Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Ship position performs unexpectedly, I Minerals 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 I Minerals will offset losses from the drop in I Minerals' long position.| First Ship vs. NL Industries | First Ship vs. Stepan Company | First Ship vs. BCE Inc | First Ship vs. Getty Images Holdings |
| I Minerals vs. Air Products and | I Minerals vs. Avient Corp | I Minerals vs. SunOpta | I Minerals vs. Ecolab Inc |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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