Correlation Between Pangaea Logistic and EuroDry
Can any of the company-specific risk be diversified away by investing in both Pangaea Logistic and EuroDry 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 Pangaea Logistic and EuroDry into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pangaea Logistic and EuroDry, you can compare the effects of market volatilities on Pangaea Logistic and EuroDry 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 Pangaea Logistic with a short position of EuroDry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pangaea Logistic and EuroDry.
Diversification Opportunities for Pangaea Logistic and EuroDry
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pangaea and EuroDry is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Pangaea Logistic and EuroDry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EuroDry and Pangaea Logistic 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 Pangaea Logistic are associated (or correlated) with EuroDry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EuroDry has no effect on the direction of Pangaea Logistic i.e., Pangaea Logistic and EuroDry go up and down completely randomly.
Pair Corralation between Pangaea Logistic and EuroDry
Given the investment horizon of 90 days Pangaea Logistic is expected to generate 1.41 times less return on investment than EuroDry. But when comparing it to its historical volatility, Pangaea Logistic is 1.19 times less risky than EuroDry. It trades about 0.01 of its potential returns per unit of risk. EuroDry is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,120 in EuroDry on November 1, 2024 and sell it today you would earn a total of 0.01 from holding EuroDry or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pangaea Logistic vs. EuroDry
Performance |
| Timeline |
| Pangaea Logistic |
| EuroDry |
Pangaea Logistic and EuroDry Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pangaea Logistic and EuroDry
The main advantage of trading using opposite Pangaea Logistic and EuroDry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pangaea Logistic position performs unexpectedly, EuroDry 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 EuroDry will offset losses from the drop in EuroDry's long position.| Pangaea Logistic vs. EuroDry | Pangaea Logistic vs. Costamare | Pangaea Logistic vs. Global Ship Lease | Pangaea Logistic vs. Danaos |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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