Correlation Between Global Ship and Safe Bulkers
Can any of the company-specific risk be diversified away by investing in both Global Ship and Safe Bulkers 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 Safe Bulkers 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 Safe Bulkers, you can compare the effects of market volatilities on Global Ship and Safe Bulkers 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 Safe Bulkers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Safe Bulkers.
Diversification Opportunities for Global Ship and Safe Bulkers
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Safe is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers 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 Safe Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Bulkers has no effect on the direction of Global Ship i.e., Global Ship and Safe Bulkers go up and down completely randomly.
Pair Corralation between Global Ship and Safe Bulkers
Assuming the 90 days trading horizon Global Ship Lease is expected to generate 1.53 times more return on investment than Safe Bulkers. However, Global Ship is 1.53 times more volatile than Safe Bulkers. It trades about 0.06 of its potential returns per unit of risk. Safe Bulkers is currently generating about 0.07 per unit of risk. If you would invest 2,138 in Global Ship Lease on November 2, 2024 and sell it today you would earn a total of 511.00 from holding Global Ship Lease or generate 23.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.79% |
| Values | Daily Returns |
Global Ship Lease vs. Safe Bulkers
Performance |
| Timeline |
| Global Ship Lease |
| Safe Bulkers |
Global Ship and Safe Bulkers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Safe Bulkers
The main advantage of trading using opposite Global Ship and Safe Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Safe Bulkers 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 Safe Bulkers will offset losses from the drop in Safe Bulkers' long position.| Global Ship vs. Safe Bulkers | Global Ship vs. Diana Shipping | Global Ship vs. Costamare | Global Ship vs. Safe Bulkers |
| Safe Bulkers vs. Safe Bulkers | Safe Bulkers vs. Global Ship Lease | Safe Bulkers vs. Diana Shipping | Safe Bulkers vs. Costamare |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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