Correlation Between Navios Maritime and Pacific Basin
Can any of the company-specific risk be diversified away by investing in both Navios Maritime and Pacific Basin 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 Navios Maritime and Pacific Basin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Navios Maritime Partners and Pacific Basin Shipping, you can compare the effects of market volatilities on Navios Maritime and Pacific Basin 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 Navios Maritime with a short position of Pacific Basin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Navios Maritime and Pacific Basin.
Diversification Opportunities for Navios Maritime and Pacific Basin
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Navios and Pacific is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Navios Maritime Partners and Pacific Basin Shipping in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Basin Shipping and Navios Maritime 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 Navios Maritime Partners are associated (or correlated) with Pacific Basin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Basin Shipping has no effect on the direction of Navios Maritime i.e., Navios Maritime and Pacific Basin go up and down completely randomly.
Pair Corralation between Navios Maritime and Pacific Basin
Considering the 90-day investment horizon Navios Maritime Partners is expected to generate 0.84 times more return on investment than Pacific Basin. However, Navios Maritime Partners is 1.19 times less risky than Pacific Basin. It trades about 0.02 of its potential returns per unit of risk. Pacific Basin Shipping is currently generating about -0.08 per unit of risk. If you would invest 4,843 in Navios Maritime Partners on August 28, 2024 and sell it today you would earn a total of 89.00 from holding Navios Maritime Partners or generate 1.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.2% |
| Values | Daily Returns |
Navios Maritime Partners vs. Pacific Basin Shipping
Performance |
| Timeline |
| Navios Maritime Partners |
| Pacific Basin Shipping |
Navios Maritime and Pacific Basin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Navios Maritime and Pacific Basin
The main advantage of trading using opposite Navios Maritime and Pacific Basin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Navios Maritime position performs unexpectedly, Pacific Basin 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 Pacific Basin will offset losses from the drop in Pacific Basin's long position.| Navios Maritime vs. Global Ship Lease | Navios Maritime vs. Costamare | Navios Maritime vs. Genco Shipping Trading | Navios Maritime vs. Danaos |
| Pacific Basin vs. Copa Holdings SA | Pacific Basin vs. United Airlines Holdings | Pacific Basin vs. Delta Air Lines | Pacific Basin vs. SkyWest |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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