Correlation Between Global Ship and HE Equipment
Can any of the company-specific risk be diversified away by investing in both Global Ship and HE Equipment 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 HE Equipment 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 HE Equipment Services, you can compare the effects of market volatilities on Global Ship and HE Equipment 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 HE Equipment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and HE Equipment.
Diversification Opportunities for Global Ship and HE Equipment
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and HEES is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and HE Equipment Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HE Equipment Services 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 HE Equipment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HE Equipment Services has no effect on the direction of Global Ship i.e., Global Ship and HE Equipment go up and down completely randomly.
Pair Corralation between Global Ship and HE Equipment
Assuming the 90 days trading horizon Global Ship Lease is expected to under-perform the HE Equipment. But the preferred stock apears to be less risky and, when comparing its historical volatility, Global Ship Lease is 4.98 times less risky than HE Equipment. The preferred stock trades about -0.05 of its potential returns per unit of risk. The HE Equipment Services is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5,293 in HE Equipment Services on August 31, 2024 and sell it today you would earn a total of 640.00 from holding HE Equipment Services or generate 12.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. HE Equipment Services
Performance |
| Timeline |
| Global Ship Lease |
| HE Equipment Services |
Global Ship and HE Equipment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and HE Equipment
The main advantage of trading using opposite Global Ship and HE Equipment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, HE Equipment 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 HE Equipment will offset losses from the drop in HE Equipment's long position.| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
| HE Equipment vs. GATX Corporation | HE Equipment vs. McGrath RentCorp | HE Equipment vs. Alta Equipment Group | HE Equipment vs. Ryder System |
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 CEOs Directory module to screen CEOs from public companies around the world.
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