Correlation Between Pacific Basin and Safe Bulkers
Can any of the company-specific risk be diversified away by investing in both Pacific Basin and Safe Bulkers 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 Pacific Basin and Safe Bulkers into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Basin Shipping and Safe Bulkers, you can compare the effects of market volatilities on Pacific Basin and Safe Bulkers 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 Pacific Basin with a short position of Safe Bulkers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Basin and Safe Bulkers.
Diversification Opportunities for Pacific Basin and Safe Bulkers
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pacific and Safe is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Basin Shipping and Safe Bulkers in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe Bulkers and Pacific Basin 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 Pacific Basin Shipping are associated (or correlated) with Safe Bulkers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe Bulkers has no effect on the direction of Pacific Basin i.e., Pacific Basin and Safe Bulkers go up and down completely randomly.
Pair Corralation between Pacific Basin and Safe Bulkers
If you would invest 347.00 in Safe Bulkers on November 28, 2024 and sell it today you would earn a total of 42.00 from holding Safe Bulkers or generate 12.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pacific Basin Shipping vs. Safe Bulkers
Performance |
| Timeline |
| Pacific Basin Shipping |
| Safe Bulkers |
Pacific Basin and Safe Bulkers Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Basin and Safe Bulkers
The main advantage of trading using opposite Pacific Basin and Safe Bulkers positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Basin position performs unexpectedly, Safe Bulkers 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 Safe Bulkers will offset losses from the drop in Safe Bulkers' long position.| Pacific Basin vs. American Shipping | Pacific Basin vs. EuroDry | Pacific Basin vs. Nippon Yusen Kabushiki | Pacific Basin vs. Euroseas |
| Safe Bulkers vs. Global Ship Lease | Safe Bulkers vs. Costamare | Safe Bulkers vs. Navios Maritime Partners | Safe Bulkers vs. Genco Shipping Trading |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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