Correlation Between Global Ship and Vestis
Can any of the company-specific risk be diversified away by investing in both Global Ship and Vestis 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 Vestis 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 Vestis, you can compare the effects of market volatilities on Global Ship and Vestis 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 Vestis. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Vestis.
Diversification Opportunities for Global Ship and Vestis
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and Vestis is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Vestis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vestis 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 Vestis. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vestis has no effect on the direction of Global Ship i.e., Global Ship and Vestis go up and down completely randomly.
Pair Corralation between Global Ship and Vestis
Assuming the 90 days trading horizon Global Ship is expected to generate 6.1 times less return on investment than Vestis. But when comparing it to its historical volatility, Global Ship Lease is 5.09 times less risky than Vestis. It trades about 0.07 of its potential returns per unit of risk. Vestis is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,369 in Vestis on August 24, 2024 and sell it today you would earn a total of 193.00 from holding Vestis or generate 14.1% 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. Vestis
Performance |
| Timeline |
| Global Ship Lease |
| Vestis |
Global Ship and Vestis Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Vestis
The main advantage of trading using opposite Global Ship and Vestis positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Vestis 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 Vestis will offset losses from the drop in Vestis' 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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