Correlation Between Oceanpal and Nordic American
Can any of the company-specific risk be diversified away by investing in both Oceanpal and Nordic American 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 Oceanpal and Nordic American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oceanpal and Nordic American Tankers, you can compare the effects of market volatilities on Oceanpal and Nordic American 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 Oceanpal with a short position of Nordic American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oceanpal and Nordic American.
Diversification Opportunities for Oceanpal and Nordic American
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Oceanpal and Nordic is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Oceanpal and Nordic American Tankers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic American Tankers and Oceanpal 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 Oceanpal are associated (or correlated) with Nordic American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic American Tankers has no effect on the direction of Oceanpal i.e., Oceanpal and Nordic American go up and down completely randomly.
Pair Corralation between Oceanpal and Nordic American
Allowing for the 90-day total investment horizon Oceanpal is expected to under-perform the Nordic American. In addition to that, Oceanpal is 1.3 times more volatile than Nordic American Tankers. It trades about -0.25 of its total potential returns per unit of risk. Nordic American Tankers is currently generating about -0.28 per unit of volatility. If you would invest 335.00 in Nordic American Tankers on August 27, 2024 and sell it today you would lose (40.00) from holding Nordic American Tankers or give up 11.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oceanpal vs. Nordic American Tankers
Performance |
| Timeline |
| Oceanpal |
| Nordic American Tankers |
Oceanpal and Nordic American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oceanpal and Nordic American
The main advantage of trading using opposite Oceanpal and Nordic American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oceanpal position performs unexpectedly, Nordic American 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 Nordic American will offset losses from the drop in Nordic American's long position.| Oceanpal vs. Star Bulk Carriers | Oceanpal vs. TOP Ships | Oceanpal vs. Seanergy Maritime Holdings | Oceanpal vs. Performance Shipping |
| Nordic American vs. Genco Shipping Trading | Nordic American vs. Golden Ocean Group | Nordic American vs. Star Bulk Carriers | Nordic American vs. Oceanpal |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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