Correlation Between Matson and Golden Ocean
Can any of the company-specific risk be diversified away by investing in both Matson and Golden Ocean 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 Matson and Golden Ocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Matson Inc and Golden Ocean Group, you can compare the effects of market volatilities on Matson and Golden Ocean 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 Matson with a short position of Golden Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Matson and Golden Ocean.
Diversification Opportunities for Matson and Golden Ocean
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Matson and Golden is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Matson Inc and Golden Ocean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ocean Group and Matson 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 Matson Inc are associated (or correlated) with Golden Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ocean Group has no effect on the direction of Matson i.e., Matson and Golden Ocean go up and down completely randomly.
Pair Corralation between Matson and Golden Ocean
Given the investment horizon of 90 days Matson Inc is expected to generate 1.85 times more return on investment than Golden Ocean. However, Matson is 1.85 times more volatile than Golden Ocean Group. It trades about 0.21 of its potential returns per unit of risk. Golden Ocean Group is currently generating about 0.1 per unit of risk. If you would invest 13,291 in Matson Inc on August 27, 2024 and sell it today you would earn a total of 2,313 from holding Matson Inc or generate 17.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Matson Inc vs. Golden Ocean Group
Performance |
| Timeline |
| Matson Inc |
| Golden Ocean Group |
Matson and Golden Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Matson and Golden Ocean
The main advantage of trading using opposite Matson and Golden Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Matson position performs unexpectedly, Golden Ocean 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 Golden Ocean will offset losses from the drop in Golden Ocean's long position.The idea behind Matson Inc and Golden Ocean Group 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.| Golden Ocean vs. Genco Shipping Trading | Golden Ocean vs. Global Ship Lease | Golden Ocean vs. Diana Shipping | Golden Ocean 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 Transaction History module to view history of all your transactions and understand their impact on performance.
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