Correlation Between Safe Bulkers and Matson
Can any of the company-specific risk be diversified away by investing in both Safe Bulkers and Matson 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 Safe Bulkers and Matson into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Safe Bulkers and Matson Inc, you can compare the effects of market volatilities on Safe Bulkers and Matson 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 Safe Bulkers with a short position of Matson. Check out your portfolio center. Please also check ongoing floating volatility patterns of Safe Bulkers and Matson.
Diversification Opportunities for Safe Bulkers and Matson
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Safe and Matson is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Safe Bulkers and Matson Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matson Inc and Safe Bulkers 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 Safe Bulkers are associated (or correlated) with Matson. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matson Inc has no effect on the direction of Safe Bulkers i.e., Safe Bulkers and Matson go up and down completely randomly.
Pair Corralation between Safe Bulkers and Matson
Assuming the 90 days horizon Safe Bulkers is expected to generate 34.15 times less return on investment than Matson. But when comparing it to its historical volatility, Safe Bulkers is 5.86 times less risky than Matson. It trades about 0.03 of its potential returns per unit of risk. Matson Inc is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 13,091 in Matson Inc on August 24, 2024 and sell it today you would earn a total of 2,173 from holding Matson Inc or generate 16.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Safe Bulkers vs. Matson Inc
Performance |
| Timeline |
| Safe Bulkers |
| Matson Inc |
Safe Bulkers and Matson Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Safe Bulkers and Matson
The main advantage of trading using opposite Safe Bulkers and Matson positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safe Bulkers position performs unexpectedly, Matson 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 Matson will offset losses from the drop in Matson's long position.The idea behind Safe Bulkers and Matson Inc 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.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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