Correlation Between Global Ship and Cool
Can any of the company-specific risk be diversified away by investing in both Global Ship and Cool 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 Cool 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 Cool Company, you can compare the effects of market volatilities on Global Ship and Cool 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 Cool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Cool.
Diversification Opportunities for Global Ship and Cool
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Global and Cool is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Cool Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cool Company 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 Cool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cool Company has no effect on the direction of Global Ship i.e., Global Ship and Cool go up and down completely randomly.
Pair Corralation between Global Ship and Cool
Considering the 90-day investment horizon Global Ship Lease is expected to generate 0.58 times more return on investment than Cool. However, Global Ship Lease is 1.73 times less risky than Cool. It trades about -0.14 of its potential returns per unit of risk. Cool Company is currently generating about -0.28 per unit of risk. If you would invest 2,326 in Global Ship Lease on August 28, 2024 and sell it today you would lose (143.00) from holding Global Ship Lease or give up 6.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Cool Company
Performance |
| Timeline |
| Global Ship Lease |
| Cool Company |
Global Ship and Cool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Cool
The main advantage of trading using opposite Global Ship and Cool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Cool 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 Cool will offset losses from the drop in Cool's long position.| Global Ship vs. Costamare | Global Ship vs. Navios Maritime Partners | Global Ship vs. Genco Shipping Trading | Global Ship vs. Star Bulk Carriers |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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