Correlation Between Global Ship and Danaos
Can any of the company-specific risk be diversified away by investing in both Global Ship and Danaos 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 Danaos 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 Danaos, you can compare the effects of market volatilities on Global Ship and Danaos 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 Danaos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Ship and Danaos.
Diversification Opportunities for Global Ship and Danaos
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Danaos is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Global Ship Lease and Danaos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danaos 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 Danaos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danaos has no effect on the direction of Global Ship i.e., Global Ship and Danaos go up and down completely randomly.
Pair Corralation between Global Ship and Danaos
Considering the 90-day investment horizon Global Ship is expected to generate 1.52 times less return on investment than Danaos. In addition to that, Global Ship is 1.11 times more volatile than Danaos. It trades about 0.04 of its total potential returns per unit of risk. Danaos is currently generating about 0.07 per unit of volatility. If you would invest 5,044 in Danaos on November 1, 2024 and sell it today you would earn a total of 2,939 from holding Danaos or generate 58.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Ship Lease vs. Danaos
Performance |
| Timeline |
| Global Ship Lease |
| Danaos |
Global Ship and Danaos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Ship and Danaos
The main advantage of trading using opposite Global Ship and Danaos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Ship position performs unexpectedly, Danaos 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 Danaos will offset losses from the drop in Danaos' long position.| Global Ship vs. Costamare | Global Ship vs. Navios Maritime Partners | Global Ship vs. Genco Shipping Trading | Global Ship vs. Star Bulk Carriers |
| Danaos vs. Genco Shipping Trading | Danaos vs. Costamare | Danaos vs. Ardmore Shpng | Danaos vs. Global Ship Lease |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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