Correlation Between Genco Shipping and Hilltop Holdings

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Can any of the company-specific risk be diversified away by investing in both Genco Shipping and Hilltop Holdings 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 Genco Shipping and Hilltop Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Genco Shipping Trading and Hilltop Holdings, you can compare the effects of market volatilities on Genco Shipping and Hilltop Holdings 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 Genco Shipping with a short position of Hilltop Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Genco Shipping and Hilltop Holdings.

Diversification Opportunities for Genco Shipping and Hilltop Holdings

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Genco and Hilltop is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Genco Shipping Trading and Hilltop Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hilltop Holdings and Genco Shipping 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 Genco Shipping Trading are associated (or correlated) with Hilltop Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hilltop Holdings has no effect on the direction of Genco Shipping i.e., Genco Shipping and Hilltop Holdings go up and down completely randomly.

Pair Corralation between Genco Shipping and Hilltop Holdings

Assuming the 90 days trading horizon Genco Shipping is expected to generate 1.66 times less return on investment than Hilltop Holdings. But when comparing it to its historical volatility, Genco Shipping Trading is 1.62 times less risky than Hilltop Holdings. It trades about 0.09 of its potential returns per unit of risk. Hilltop Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,804  in Hilltop Holdings on September 6, 2024 and sell it today you would earn a total of  156.00  from holding Hilltop Holdings or generate 5.56% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Genco Shipping Trading  vs.  Hilltop Holdings

 Performance 
       Timeline  
Genco Shipping Trading 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Weak
Over the last 90 days Genco Shipping Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Genco Shipping is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Hilltop Holdings 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Hilltop Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hilltop Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Genco Shipping and Hilltop Holdings Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Genco Shipping and Hilltop Holdings

The main advantage of trading using opposite Genco Shipping and Hilltop Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Genco Shipping position performs unexpectedly, Hilltop Holdings 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 Hilltop Holdings will offset losses from the drop in Hilltop Holdings' long position.
The idea behind Genco Shipping Trading and Hilltop Holdings 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.
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.

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