Correlation Between Global Ship and 437076BM3

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Can any of the company-specific risk be diversified away by investing in both Global Ship and 437076BM3 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 437076BM3 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 HOME DEPOT INC, you can compare the effects of market volatilities on Global Ship and 437076BM3 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 437076BM3. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and 437076BM3.

Diversification Opportunities for Global Ship and 437076BM3

-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Global and 437076BM3 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and HOME DEPOT INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HOME DEPOT INC 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 437076BM3. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HOME DEPOT INC has no effect on the direction of Global Ship i.e., Global Ship and 437076BM3 go up and down completely randomly.

Pair Corralation between Global Ship and 437076BM3

Assuming the 90 days trading horizon Global Ship Lease is expected to generate 0.72 times more return on investment than 437076BM3. However, Global Ship Lease is 1.39 times less risky than 437076BM3. It trades about -0.05 of its potential returns per unit of risk. HOME DEPOT INC is currently generating about -0.09 per unit of risk. If you would invest  2,640  in Global Ship Lease on August 31, 2024 and sell it today you would lose (20.00) from holding Global Ship Lease or give up 0.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Global Ship Lease  vs.  HOME DEPOT INC

 Performance 
       Timeline  
Global Ship Lease 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Global Ship Lease are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong essential indicators, Global Ship is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
HOME DEPOT INC 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days HOME DEPOT INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 437076BM3 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Global Ship and 437076BM3 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Global Ship and 437076BM3

The main advantage of trading using opposite Global Ship and 437076BM3 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, 437076BM3 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 437076BM3 will offset losses from the drop in 437076BM3's long position.
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The idea behind Global Ship Lease and HOME DEPOT INC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.

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