Correlation Between Global Ship and Aterian
Can any of the company-specific risk be diversified away by investing in both Global Ship and Aterian 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 Global Ship and Aterian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Ship Lease and Aterian, you can compare the effects of market volatilities on Global Ship and Aterian 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 Global Ship with a short position of Aterian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Aterian.
Diversification Opportunities for Global Ship and Aterian
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Global and Aterian is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Aterian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aterian and Global 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 Global Ship Lease are associated (or correlated) with Aterian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aterian has no effect on the direction of Global Ship i.e., Global Ship and Aterian go up and down completely randomly.
Pair Corralation between Global Ship and Aterian
Assuming the 90 days trading horizon Global Ship Lease is expected to generate 0.2 times more return on investment than Aterian. However, Global Ship Lease is 4.97 times less risky than Aterian. It trades about 0.05 of its potential returns per unit of risk. Aterian is currently generating about -0.07 per unit of risk. If you would invest 2,617 in Global Ship Lease on September 4, 2024 and sell it today you would earn a total of 18.00 from holding Global Ship Lease or generate 0.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Aterian
Performance |
| Timeline |
| Global Ship Lease |
| Aterian |
Global Ship and Aterian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Aterian
The main advantage of trading using opposite Global Ship and Aterian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Aterian 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 Aterian will offset losses from the drop in Aterian's long position.| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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