Correlation Between Global Ship and Diana Shipping
Can any of the company-specific risk be diversified away by investing in both Global Ship and Diana Shipping 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 Diana Shipping 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 Diana Shipping, you can compare the effects of market volatilities on Global Ship and Diana Shipping 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 Diana Shipping. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Diana Shipping.
Diversification Opportunities for Global Ship and Diana Shipping
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Diana is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Diana Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diana Shipping 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 Diana Shipping. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diana Shipping has no effect on the direction of Global Ship i.e., Global Ship and Diana Shipping go up and down completely randomly.
Pair Corralation between Global Ship and Diana Shipping
Assuming the 90 days trading horizon Global Ship Lease is expected to generate 1.12 times more return on investment than Diana Shipping. However, Global Ship is 1.12 times more volatile than Diana Shipping. It trades about 0.05 of its potential returns per unit of risk. Diana Shipping is currently generating about 0.06 per unit of risk. If you would invest 2,144 in Global Ship Lease on August 24, 2024 and sell it today you would earn a total of 466.00 from holding Global Ship Lease or generate 21.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Diana Shipping
Performance |
| Timeline |
| Global Ship Lease |
| Diana Shipping |
Global Ship and Diana Shipping Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Diana Shipping
The main advantage of trading using opposite Global Ship and Diana Shipping positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Diana Shipping 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 Diana Shipping will offset losses from the drop in Diana Shipping'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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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