Correlation Between Global Ship and Costamare
Can any of the company-specific risk be diversified away by investing in both Global Ship and Costamare 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 Costamare 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 Costamare, you can compare the effects of market volatilities on Global Ship and Costamare 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 Costamare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Costamare.
Diversification Opportunities for Global Ship and Costamare
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Costamare is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Costamare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Costamare 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 Costamare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Costamare has no effect on the direction of Global Ship i.e., Global Ship and Costamare go up and down completely randomly.
Pair Corralation between Global Ship and Costamare
Assuming the 90 days trading horizon Global Ship is expected to generate 1.19 times less return on investment than Costamare. But when comparing it to its historical volatility, Global Ship Lease is 1.55 times less risky than Costamare. It trades about 0.05 of its potential returns per unit of risk. Costamare is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,116 in Costamare on August 28, 2024 and sell it today you would earn a total of 515.00 from holding Costamare or generate 24.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Global Ship Lease vs. Costamare
Performance |
| Timeline |
| Global Ship Lease |
| Costamare |
Global Ship and Costamare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Costamare
The main advantage of trading using opposite Global Ship and Costamare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Costamare 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 Costamare will offset losses from the drop in Costamare's long position.| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
| Costamare vs. Safe Bulkers | Costamare vs. Safe Bulkers | Costamare vs. Diana Shipping | Costamare vs. Global Ship Lease |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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